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- The FDIC Chair said that the agency is planning to return $4 billion in Signature crypto deposits “by early next week.”
- The FDIC Chair shared the agency’s plan as they want to deal with the recent banking failures in the U.S.
- In mid-March, the U.S. economy experienced a massive fall after the collapse of major banks.
The United States Federal Deposit Insurance Corporation (FDIC) Chair, Martin Gruenberg, shared his thoughts during a recent hearing. The hearing is titled “The Federal Regulators’s Response to Recent Bank Failures,” held on March 29. Gruenberg shared FDIC plans to return nearly $4 billion in deposits connected to recently collapsed Signature Bank by early next month.
The FDIC Chair’s Statement
Chair Martin Gruenberg said that the payments platform of Signature Bank, Signet, was not a part in the NYCB bid. These payments include the digital asset deposits. It was “in the process now being marketed” to the potential buyers. The FDIC, New York financial regulators, shut-down the crypto-linked bank in mid-March. Regulators have cited the risks to the U.S. economy in the aftermath of the failures of the Silicon Valley Bank (SVB) and Silvergate Bank.
During the hearing, the Treasury Department’s Undersecretary for Domestic Finance, Nellie Liang, said that she didn’t believe in crypto. As she said, crypto “played a direct role” in the recent failure of the U.S. banks, either Signature or SVB bank.
“I know that Signature had activities involved in digital assets, but I don’t believe that is the main [cause],” Liang said.
This hearing marked the second time that Liang, Gruenberg, and Fed Vice Chairman for Supervision Michael Barr addressed lawmakers following the collapse of 3 major banks in the United States.
The Senate Banking Committee also held a hearing on March 28, during which Gruenberg said “Silvergate Bank had not adequately managed risks that led to its failure.” Although some lawmakers and regulators have likely cited the banks’ ties to digital asset companies. Meanwhile,many of them also have criticized the association as being without merit.
The Ex-House of Representatives member and Signature board member Barney Frank said that officials wanted to send a “very strong anti-crypto message,” claiming that the bank had no issues with solvency at the time of its closure.
The hearing also highlights that the House Financial Services Committee is exploring the response of federal regulators to recent bank failures. The FDIC Chair said the deposits that were not included in the bid from a New York Community Bancorp (NYCB) subsidiary for Signature would be returned “by early next week.” There are $4 billion in deposits that are linked to digital assets.
This also showed 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.”
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
