Signature Bank deposits, branches sold to Flagstar, crypto not included

Signature Bank deposits, branches sold to Flagstar, crypto not included

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Just one week after its collapse, Signature Bank’s deposits and loans will be sold to Flagstar Bank, a subsidiary of New York Community Bancorp; however, cryptocurrency related deposits will not be part of the deal.

The United States Federal Deposit Insurance Corporation (FDIC) toannounced the deal on March 19, which will see $38.4 billion in non-cryptocurrency-related deposits and $12.9 billion in loans assumed by the Michigan-based bank under a “purchase and assumption agreement.”

Effective March 20, Signature’s Bank’s 40 branches will begin operating as Flagstar Bank, where all deposits assumed by Flagstar Bank will continue to be insured up to the insurance limit of $250,000.

The Flagstar Bank acquisition agreement did not include approximately $4 billion in deposits held by Signature Bank’s digital asset business. Instead, the FDIC confirmed that it would transfer these deposits directly to customers who opened a digital bank account, stating:

“The FDIC will provide these deposits directly to customers whose accounts are associated with the digital banking business.”

The figure of 4,000 million dollars amounts to 4.5% of total deposits of $88.6 billion that Signature Bank had as of December 31.

Coinbase, Celsius, and Paxos are three crypto companies that recently confirmed having some exposure to Signature Bank.

Related: US Lawmaker Accuses FDIC of Using Bank Instability to Attack Crypto

Last week, a March 17 Reuters report cited two sources as suggesting that any buyer of Signature would be required to get rid of crypto activities as part of a possible rescue plan.

At the time, an FDIC spokesperson denied this, noting that the agency did not require cryptocurrency divestment as part of any sale.

However, Castle Island Ventures partner Nic Carter believes the latest announcement shows the FDIC “lied” in its response to Reuters.

The acquisition comes after the FDIC created Signature Bridge Bank on March 12 after the New York Department of Financial Services (NYDFS) closed the bank and appointed the FDIC as its trustee.