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Signature Bank has given cryptocurrency companies and depositors a deadline of April 5 to withdraw their funds, as their deposits were not included in a rescue deal recently arranged with Flagstar Bank.
The Michigan-based bank, which is a subsidiary of New York Community Bancorp, agreed to purchase deposits and loans from Signature Bank earlier this month after reaching an agreement with U.S. regulators.
As the deadline approaches, many in the crypto industry are scrambling to move their money elsewhere.
Signature Bank Crypto Assets Excluded From Bidding
After the Federal Deposit Insurance Corporation (FDIC) took Signature under its wing, the highly-anticipated process of bidding for the remaining business operations and trademark rights of the said company took flight.
This, however, did not come without its own set of hiccups. Flagstar’s bid fell short of the mark as it did not cover approximately $4 billion in deposits that are tied to Signature’s digital-asset business. According to a spokesperson from FDIC, this glaring omission cannot be ignored.
To make matters worse, the FDIC had to swoop in after both Silvergate and Silicon Valley Bank suffered a similar fate. Reports have it that Signature’s dealings were under heavy scrutiny by the authorities, leading to the takeover.
Apparently, Signature Bank reps were unable to provide solid data on the deficit they incurred after SVB went belly up, which left the FDIC with no choice but to intervene.
Regulators Warn Crypto Depositors Of Impending Account Closures
The FDIC made the announcement on March 28th, notifying the remaining cryptocurrency clients of Signature Bank that they must shut down all their accounts by April 5.
This directive was issued with a caveat that in the absence of new banking arrangements, the affected companies will receive a check at their respective headquarters. This check will allow them to cash out their funds at a later date, which provides some temporary relief for those who may face challenges finding a new financial institution to manage their crypto transactions.
It is imperative for the impacted businesses to act promptly to ensure that they comply with the FDIC’s mandate and safeguard their financial interests, the regulator stressed.
The cryptocurrency industry has been subject to a myriad of regulatory changes over the past few years, and this trend is expected to continue in the future.
As digital currencies become more mainstream, governments and financial regulators worldwide are keen to introduce new regulations to protect consumers and curb illicit activities.
-Featured image: krblokhin/Seeking Alpha
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