FDIC plans to return $4B in Signature crypto deposits ‘by early next week’

Martin Gruenberg, chair of the United States Federal Deposit Insurance Corporation, has said the agency plans to return roughly $4 billion in deposits connected to Signature Bank’s digital asset banking business by early April.

In a March 29 hearing of the U.S. House Financial Services Committee exploring federal regulators’ responses to recent bank failures, Gruenberg said the deposits that were not included in the bid from a New York Community Bancorp subsidiary for Signature would be returned “by early next week.” There are $4 billion in deposits tied to digital assets, and reports had indicated that the FDIC would close all crypto-related accounts not part of the NYCB deal by April 5 if depositors didn’t move their funds.

*FDIC chair Martin Gruenberg speaking at a March 29 hearing of the U.S. House Financial Services Committee*

According to Gruenberg, Signature’s payments platform Signet — which, along with the digital asset deposits, was not included in the NYCB bid — was “in the process now of being marketed” to potential buyers. The FDIC, along with New York financial regulators, closed the crypto-friendly bank on March 12, citing risks to the U.S. economy after Silicon Valley Bank and Silvergate Bank had failed.

Nellie Liang, under secretary for domestic finance at the U.S. Treasury Department, said she didn’t believe crypto “played a direct role” in the failure of either Signature or Silicon Valley Bank:

“I know that Signature had activities involved in digital assets, but I don’t believe that is the main [cause].”

The March 29 hearing marked the second time that Liang, Gruenberg, and Fed Vice Chairman for Supervision Michael Barr addressed lawmakers following the collapse of three major banks in the United States. The Senate Banking Committee held a hearing on March 28, in which Gruenberg said Silvergate Bank had not adequately managed risks that led to its failure.

Though some lawmakers and regulators have seemingly pointed to the banks’ ties to digital asset companies, many have criticized the association as being without merit. Former House of Representatives member and Signature board member Barney Frank has said officials that wanted to send a “very strong anti-crypto message,” claiming that the bank had no issues with solvency at the time of its closure.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom