The United States Federal Deposit Insurance Corporation has decided to agree with Flagstar bank. All deposits except crypto-related ones will now be run under Flagstar bank.
Flagstar bank is a subsidiary company of United States-based New York Community Bancorp. After the collapse of the three biggest banks, Silvergate bank, the Silicon Valley Bank, and Signature bank in the United States, the authorities have decided to start a bidding process to liquidate their assets.
On 19 March, the FDIC announced that the 40 branches of the Signature bank will now work under Flagstar bank. In a report released by the FDIC, they have informed customers that they will now access their funds from 20 March onwards. However, the crypto-related services were not transferred to Flagstar bank.
Additionally, the Federal Deposit Insurance Corporation announces that the funds will be insured by them up to the insurance limit. The collapse of the crypto-friendly banks in the United States has alarmed the authorities about the risk associated with it. According to a report released by the FDIC, the transfer of functionaries of the Signature didn’t include crypto-related business.
The FDIC denied the access of digital assets business to Flagstar bank as it’s the clear instructions from the FDIC before the transition process. Assets worth around $4 billion will be directly transferred to the customers but they need a digital account.
A few days back a report circulated that the potential buyer of the Signature bank needed to give up the crypto business because of remedial measures. However, the FDIC spokesperson has denied the report and said there’s no such provision like this. Even the FDIC chairman cited several times in his statement that the agency is not looking to restrict any particular activity by the bank.
By not giving the right of digital assets to Flagstar bank the FDIC has contradicted its stand on crypto management. The FDIC ensured that they will transfer the digital assets from their own to the customer’s digital account.
There are several crypto companies like Coinbase, Celsius, and Paxos who announced their exposure in the collapsed Signature bank. Crypto management is currently the most debatable topic in the finance world and every country is looking for its digital asset management regulation after the collapse of crypto-friendly banks.
