FDIC sells Signature Bank Deposits to Flagstar. Crypto not included

FDIC sells Signature Bank Deposits to Flagstar. Crypto not included

On March 20, the 40 Signature Bank branches will officially reopen as Flagstar Bank.

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Signature Bank’s loans and deposits were sold to Flagstar Bank, a subsidiary New York Community Bancorp, just a week after the collapse. However, crypto-related deposits will not be included in the sale.

The United States Federal Deposit Insurance Corporation announced the agreement on March 19, which will see $38.4 billion worth of non-cryptocurrency-related deposits and $12.9 billion in loans taken over by the Michigan-based bank under a “purchase and assumption agreement.”

Signature’s Bank 40 branches, which will be operating under Flagstar Bank starting March 20, will become Flagstar Bank. All deposits taken by Flagstar Bank will remain insured up to the $250,000 limit.

Flagstar Bank’s takeover did not include $4 billion in deposits held by Signature Bank’s digital assets business. The FDIC instead confirmed that these deposits would be transferred directly to customers who open digital banking accounts.

“The FDIC will make these deposits directly to customers who have accounts that are connected with digital banking.”

This figure is 4.5% from the $88.6 Billion in deposits Signature Bank had as at Dec. 31.

Three crypto companies, Paxos, Celsius and Coinbase all confirmed that they have some exposure to Signature Bank.

Related: US lawmaker charges FDIC with using banking instability as a weapon against crypto

Two sources were quoted in a Reuters report last week that suggested that Signature’s buyer would need to divest any crypto activities as part a possible rescue plan.

A spokesperson for FDIC denied the claim at the time and stated that crypto divestment was not required as part of any sale.

Nic Carter, Castle Island Ventures partner believes that the FDIC has “lied” to Reuters with its latest announcement.

After Signature Bridge Bank’s creation by the FDIC on March 12th, following the New York Department of Financial Services closing of the bank and appointing FDIC as receiver, the FDIC took over.