Signature Bank Takeover Auction
It was revealed on the 15th that “a requirement prohibiting the continuation of business relationships with cryptocurrency (virtual currency) customers” has been set for bidders in the acquisition auction (auction) of the closed U.S. Signature Bank. became.
The Federal Deposit Insurance Corporation (FDIC) has set a deadline for bids to buy Signature Bank on May 17, Reuters reports, citing unidentified sources.
Over the past few weeks, three banks closely related to the cryptocurrency industry have failed and closed down one after another. There were growing voices skeptical of the crackdown.
The decision to ban cryptocurrency customers in the takeover bid is expected to deepen the skepticism of industry insiders.
According to people familiar with the matter, the U.S. government agency FDIC, which is responsible for protecting deposits in the event of a bank failure, is responsible for asset management of the U.S. Silicon Valley Bank (SVB), which failed on the 10th, and the U.S. signature bank, which was closed by regulators on the 12th. Aiming for a complete sale to a private company.
The sale to a traditional financial institution is given priority over a non-listed company, and if the full sale is not realized, the sale of each business of the two banks is also being considered.
Among other things, any company that acquires Signature Bank will have “a conditional agreement to waive the cryptocurrency operator’s customers,” the person familiar with the matter added.
Signature Bank Closure Reasons
As of December 31, 2022, Signature Bank has total assets of approximately ¥14.6 trillion ($110.36 billion) and total deposits of approximately ¥11.8 trillion ($88.59 billion). As of the end of September 2019, the share of deposits made by cryptocurrency customers accounted for about one-fourth.
In the first place, the closure of Signature Bank was carried out by the New York State Department of Financial Services (NYDFS) on the 12th in the name of avoiding a financial system crisis caused by the collapse of Silicon Valley Bank, which spread a chain of unrest in the market.
Subsequently, the U.S. Treasury Department, the U.S. Federal Reserve Board (FRB) and the U.S. Federal Deposit Insurance Corporation (FDIC) issued a joint statement stating that all signature bank deposits would be protected by the FDIC as a systemic risk exception. There is a history.
Experts, including former Republican congressman Barney Frank, who sits on the Board of Directors of Signature Bank, have expressed skepticism about the NYDFS’s response.
Mr. Frank acknowledged that about 1.3 trillion yen (over $10 billion) was withdrawn from depositors following the SVB bankruptcy, but while there was a surplus in the ability to pay, he said, “Crypto assets (virtual currencies) Opposing regulators stepped in anyway to get the message across,” he told CNBC.
Brian Brooks, former Acting Commissioner of the Office of the Comptroller of the Currency (OCC) and one-time CEO of Binance.US, also said the signature bank closure was a concerted effort by regulators to keep the crypto industry out of the banking system. It is pointed out that it is an initiative.
In response to this tone, NYDFS Supervisor Adrienne Harris explained that cryptocurrencies are not a factor in the closure of Signature Bank. She said it was “due to a crisis of confidence in the bank’s leadership and not because of any particular industry.”
connection:US Congressman questions FDIC over signature bank shutdown
Two other banks friendly to cryptocurrencies
On March 8, US-based Silvergate Capital, which provides cryptocurrency-related services, announced that it plans to voluntarily liquidate its banking business and shrink its business.
Silvergate Bank’s payment network “Silvergate Exchange Network (SEN)” was popular as a means for institutional investors to send money to cryptocurrency exchanges. As of the end of September 2022, total deposits from customers related to digital assets totaled $11.9 billion, of which less than 10% were deposits from the failed cryptocurrency exchange FTX.
On the other hand, Silicon Valley Bank, which was closed on the 10th after causing a bank run due to an error in management judgment, is a major lender to startups. In crypto-related venture capital, Andreessen Horowitz (a16z) was found to have deposited approximately $2.85 billion, Paradigm $1.72 billion, and Pantera Capital $560 million.
connection:Signature Bank Faces Class Action Lawsuit From Shareholders
Be wary of banking services to cryptocurrencies
Federal Reserve (Fed) Chairman Jerome Powell told the Senate Committee on Banking, Housing and Urban Affairs on March 7 that banks would get involved because “we see a lot of turmoil” in the crypto space. He said he should be careful what he does. “We are seeing a huge amount of disruption, like fraud, lack of transparency and run risk,” he said.
Bloomberg reported on March 15 that it had been investigated by the Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) before it was shut down for possible money laundering. ing.
In February, a class action lawsuit was filed against Signature Bank, accusing it of facilitating FTX’s fraud. Plaintiffs primarily allege that Signature Bank was aware that FTX was misappropriating customer funds and allowed them to use its payment network.
connection:Fed Chairman Jerome Powell: Banks Should Be Careful When Engaging With Cryptocurrencies