Reuters report that any bank bidding for Signature “must give up all crypto business”

The FDIC has handed over auction of the bank to Piper Sandler, who will conduct a second auction on March 17.

Cover art/illustration via CryptoSlate

The U.S. Federal Deposit Insurance Corp (FDIC) has started requesting bids from banks interested in acquiring failed lenders Silicon Valley Bank and Signature Bank — but whoever bids on Signature cannot have any ties to the crypto industry, according to Reuters.

“Any buyer of Signature must agree to give up all the crypto business at the bank,” two sources familiar with the bank told Reuters. The sources asked to remain anonymous due to the confidentiality of the matter.

The FDIC declined to provide a statement, not only for SVB but also on their behalf. There was no immediate response to requests for comment from Signature and Piper Sandler.

FDIC scheduled to attempt second sale

As per the sources, the FDIC will is scheduled to organize its second attempted sale of both banks on March 17, after the first attempted sale on March 12 failed to find a bidder.

In the event neither bank is sold at auction, portions of them may be broken up and auctioned in separate pieces.

As per Reuters, only bidders possessing an active bank charter will be permitted to review the banks’ financial records and be able to bid, a measure intended to provide conventional banks with an advantage over private equity firms, sources say.

However, others say the requirement to divest from crypto is not true.

Crypto claims refuted

On March 14, a spokesperson quoted in Fortune refuted claims made by the New York Department of Financial Services (NYDFS) shut down Signature Bank due to its involvement with cryptocurrency companies.

However, Barney Frank, a former U.S. representative and board member of Signature, told CNBC recently that the bank was closed in order to “send a strong anti-crypto message.”

Following the closure of Signature Bank, the Biden administration-led emergency plans led by the FDIC to return all funds, not just insured ones, to customers large and small.

The bank’s closure will result in several firms searching for a new banking provider, including Coinbase and other crypto companies that stored funds with the bank.

It is estimated that approximately 30% of Signature’s deposits came from crypto firms. The bank’s shutdown follows the collapse of Silicon Valley Bank on March 10 and Silvergate Bank’s decision to cease all operations on March 8.

Meanwhile, there is growing sentiment from within the crypto community to adopt a more bullish attitude toward the acquisition of traditional financial institutions, like banks.

Crypto coming together to save one of these banks, conditional on a no-action waiver, with a mandate to make the first global crypto bank would be so dope rn.

— Ryan Zurrer (@kukulabanze) March 15, 2023