Days after the FDIC announced — and then denied — that it was requiring buyers of the assets of the shuttered institution leave crypto-related assets behind, that's what happened.
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When Signature Bank was shut down, it was a massive blow to the crypto industry. Just a few days after Silvergate Bank decided to "wind down" its business, Signature's seizure meant that many crypto companies effectively had been de-banked.
Few are left and none have been eager to pick up the slack.
New York regulators shut down Signature and turned it over to the FDIC because its leadership had "failed to provide reliable and consistent data, creating a significant crisis of confidence."
It was announced that the buyers of its assets would not be bidding for its cryptoassets.
Those would simply be returned to their owners, the FDIC said.
That led to complaints that forced the FDIC to back down, with Reuters reporting that the FDIC had told potential bidders that "any buyer of Signature must agree to give up all the crypto business at the bank."
In response, the FDIC told Reuters that "the agency would not require divestment of crypto activities as part of any sale."
However, to no one's surprise, when New York Community Bancorp's Flagstar Bank division's successful bid on Signature's $88.6 billion in deposits and 40 branches was announced, it had excluded the $4 billion in crypto company deposits.
Which means two things. One, it will be a lot harder for all but the biggest crypto company's clients to on and off-ramp their funds into dollars.
And two, those other companies will have trouble doing basic, day-to-day things like payroll.
A Deliberate Message
The accusation that the shuttering of Signature by regulators was a deliberate message to crypto companies seemed to gain strength.
That had been made by board member Barney Frank, a highly respected former Congressman who had co-authored the Dodd-Frank Act that tightened regulations on banks after the 2008 financial crisis.
The bank was seized and shuttered despite having stabilized its finances, "to send a message to get people away from crypto," Frank said. "We were singled out to be the poster child for that message."
Which is something federal bank regulators have been openly pushing banks to do for quite awhile now.
The Wall Street Journal's editorial board agreed with Frank, saying on March 20 that the FDIC had "all but confirm[ed] it closed the bank over crypto."
David Marcus, the CEO of Bitcoin Lightning Network payments firm Lightspark and leader of Meta's failed attempt to start the Libra/Diem cryptocurrency, tweeted:
"I really hope we will understand how Signature Bank was selectively stripped of its digital assets business before being acquired."
Now the message seems to have been received, and getting funds into and out of crypto will become harder.
