FDIC Tells Signature’s Crypto Clients to Close Their Accounts By April 5

Yueqi Yang and Katanga Johnson, Bloomberg News

Signage outside a Signature Bank branch in the Brooklyn borough of New York, US, on Wednesday, March 15, 2023. Signature’s collapse on Sunday was the third-largest bank failure in the US ever, behind Washington Mutual in 2008 and Silicon Valley Bank’s cataclysmic drop days ago. Photographer: Angus Mordant/Bloomberg , Bloomberg

(Bloomberg) -- The Federal Deposit Insurance Corp. is seeking to sell Signet, the real-time payments network for crypto companies operated by the now failed Signature Bank.

A spokesperson for the regulator confirmed the plan after the FDIC asked crypto depositors at Signature to close their accounts and move their money by April 5.

New York Community Bancorp. assumed most of Signature Bank’s deposits and some of its loans earlier this month following its closure by regulators as turmoil engulfed regional banks. The deal excluded about $4 billion of deposits related to Signature’s digital-assets banking business, the FDIC said at the time.

Signet had remained under the FDIC’s receivership following the NYCB deal. As questions swirled about the fate of the business, many crypto trading firms and platforms left or reduced their use of the Signet platform due to the uncertainty.

The FDIC informed depositors on Tuesday that any accounts not closed by April 5 will be automatically shut and depositors will receive a check in the mail.

“We are reaching out to the depositors from Signature whose deposits were not included in NYCB’s bid,” an FDIC spokesperson said then, confirming it pertained to digital-asset clients.

The shuttering of Silvergate Capital Corp. and Signature Bank has made it difficult for crypto platforms and investors to transfer traditional currencies. US prosecutors were investigating Signature Bank’s work with crypto clients before the lender’s sudden collapse, Bloomberg has reported.

(Adds FDIC commentary on Signet sale from first paragraph.)