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Signature Bank's assets, minus the crypto, are now owned by Flagstar Bank

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(Kitco News) - Despite last week’s denial by the Federal Deposit Insurance Corporation (FDIC) that there were no crypto-related stipulations included in its attempt to sell Signature Bank, it was announced on Monday that the bank’s deposits and loans have been sold to Flagstar Bank, a subsidiary of New York Community Bankcorp, but that its crypto-related deposits were not be included as part of the deal.

The FDIC announced the purchase and assumption agreement on Sunday, indicating that the 40 branches of Signature Bank will begin to operate under New York Community Bancorp's Flagstar Bank, N.A., starting on Monday.

Included in the announcement was the statement that, “Depositors of Signature Bridge Bank, N.A., other than cash depositors related to the digital-asset banking businesses, will automatically become depositors of the assuming institution.”

The FDIC indicated that “Flagstar Bank's bid did not include approximately $4 billion of deposits related to the former Signature Bank's digital-assets banking business,” and said that it “will provide these deposits directly to customers whose accounts are associated with the digital-asset banking businesses.”

The $4 billion figure amounts to 4.5% of the total $88.6 billion deposits that Signature Bank had as of Dec. 31.

In total, Flagstar is purchasing roughly $38.4 billion worth of Sigtuature Bridge Bank, N.S. assets, including loans worth $12.9 billion that were purchased at a discount of $2.7 billion. All deposits assumed by Flagstar will continue to be insured by the FDIC up to the insurance limit.

“Approximately $60 billion in loans will remain in the receivership for later disposition by the FDIC,” the announcement said. “In addition, the FDIC received equity appreciation rights in New York Community Bancorp, Inc., common stock with a potential value of up to $300 million.”

The FDIC estimated the cost of Signature Bank’s failure to its Deposit Insurance Fund to be approximately $2.5 billion but said the exact cost will not be known until the receivership is terminated.

Crypto tax reform bill reintroduced by a group of bipartisan lawmakers in D.C.

While the FDIC refuted last week's story that it placed limitations on the purchase of any crypto assets held by Signature Bank, the subsequent purchase of Signature Bank’s assets by Flagstar, minus the crypto asset holdings, seemed a little too coincidental for Custodia Bank CEO Caitlin Long, is now called for an investigation into the matter.

Long is likely to receive support from several lawmakers, including Minnesota Rep. Tom Emmer, who last week sent a letter to FDIC chair Martin Gruenberg calling on the FDIC chief to answer allegations that the agency had specifically instructed banks not to provide services to crypto firms, and if they did, to explain the reasoning for doing so.

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