FDIC orders Signature Bank’s crypto clients to withdraw funds by 5th April

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29th March 2023 – (New York) The US.S.Federal Deposit Insurance Corp (FDIC) has ordered Signature Bank’s cryptocurrency clients to withdraw their funds and close their accounts by 5th April. This comes after the bank’s collapse, which saw Flagstar Bank, a unit of New York Community Bancorp, step in to purchase most of Signature Bank’s deposits and loans.

FDIC spokesperson explained that Flagstar’s bid did not include around $4 billion in deposits related to Signature’s digital-asset business. The FDIC is therefore urging customers to move their funds before April 5th, after which the organisation will mail checks to the address on record for those who have not closed their accounts.

While Signature Bank’s cryptocurrency clients must withdraw their funds, the situation does not apply to all of its assets. According to reports, Flagstar Bank will take over most of Signature Bank’s deposits and loans as part of a rescue deal. The agreement sees Flagstar Bank assume substantially all of Signature Bank’s deposits, some of its loan portfolios, and all 40 of its former branches.

Signature Bank’s loans totaling approximately $60 billion and $4 billion of its deposits, however, will remain with it in receivership. The FDIC’s move to encourage customers to withdraw their digital-asset deposits is likely a result of the organisation’s decision to not include these funds in Flagstar Bank’s rescue deal.

The FDIC’s decision to encourage Signature Bank’s crypto clients to withdraw their funds by April 5th may raise some questions among the bank’s customers. However, the move is likely an effort to protect the interests of the bank’s clients as well as the FDIC’s own insurance fund.

Withdrawing funds before the deadline may enable Signature Bank’s crypto clients to avoid any potential delays or issues related to the bank’s receivership. Additionally, the FDIC’s decision to encourage withdrawals may be a reflection of the agency’s efforts to ensure that the bank’s depositors are not exposed to any undue risk.