Signature’s Potential Buyers Must Abandon Crypto Business (Report)
Companies willing to acquire the troubled Signature Bank will reportedly have to give up its cryptocurrency business. Those interested in purchasing the financial institution or Silicon Valley Bank (SVB) can submit bids by March 17.
Both entities, which acted as main lenders for numerous crypto organizations, revealed operational difficulties earlier this week, prompting American regulators to close them down.
The Necessary Condition: Forget About Crypto
According to a recent Reuters coverage, any prospective bidder of Signature Bank must agree to give up all cryptocurrency forays at the organization.
The American authorities forced the bank to shut its doors a few days ago after it revealed significant liquidity issues. The Federal Reserve maintained that the measures aimed to strengthen public confidence in the local banking system.
Multiple crypto-related firms used Signature’s services, meaning they experienced considerable troubles. The US-based exchange Coinbase said it held $240 million in corporate cash at the bank, while the blockchain infrastructure platform – Paxos – had a $250 million exposure.
Concerns of a potential banking crisis in the world’s strongest economy arose when the regulators pulled the plug on Silicon Valley Bank: one of the top 20 largest domestic banks, prior to its collapse. Circle – the company which issues the stablecoin USDC – admitted having $3.3 billion of its cash reserves stuck there.
The news negatively affected the asset, which depegged from its dollar value to as low as $0.87 (CoinGecko data). In the following days, USDC stabilized and is currently hovering around its price target.
Several bidders, including PNC Financial Services and the Royal Bank of Canada, explored the option to acquire Silicon Valley Bank last week. SVB might file for bankruptcy protection to sell its remaining assets, Reuters added.
Signature’s Cracks Before the Crash
As CryptoPotato reported, US authorities, including the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), previously investigated whether Signature Bank took necessary measures to combat money laundering by monitoring transactions. It remains unknown when the probe started and if it forced the watchdogs to shut the institution.
The regulators assured they had taken action to prevent a possible domino effect in America’s financial sector. President Joe Biden also reduced the spreading panic, describing the domestic banking system as “safe.”
He said taxpayers will not feel the demise of SVB since the money will come from fees that banks distribute into the Deposit Insurance Fund. Entities and investors exposed to the bank, though, will lose their assets because “that’s how capitalism works,” he explained.
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