An FDIC spokesperson has refuted these claims.
In a tweet on Thursday, Ripple General Counsel Stuart Alderoty reacted to reports that indicate regulators want potential Signature Bank buyers to drop crypto businesses at the bank.
Recall that New York bank was closed over the weekend with regulators citing “a significant crisis of confidence in the bank’s leadership.” However, Barney Frank, a Signature Bank board member and a former congressman speaking with CNBC on Monday, suggested it was “a very strong anti-crypto message.”
The last few weeks have been tumultuous for the American banking sector. However, the fact that all banks closed by regulators in the last few weeks are considered crypto-friendly has raised eyebrows within the crypto community, with some speculating that it is a coordinated effort to cut off the nascent market from the banking sector. Recall that Nic Carter, a pro-crypto venture capitalist, had alluded to this in a February blog post asserting, “Operation Choke Point 2.0 Is Underway, And Crypto Is In Its Crosshairs.”
A Reuters report denied by the Federal Deposit Insurance Corporation (FDIC) on Thursday, citing two unidentified sources, has only fueled this narrative. Notably, per the initial report, prospective buyers of the bank had to agree to drop all crypto business. For context, crypto businesses accounted for 25% of Signature Bank deposits by the end of September.
Alderoty, responding to the reports, asserted that any such demand from the FDIC would violate constitutional due process, citing a 2015 ruling in the Community Financial Services Association of America v. FDIC, Federal Reserve, OCC case. Notably, the ruling found that through informal guidelines, regulators had unduly coerced banks to deprive the plaintiffs of their rights to a bank account, contravening due process.
Government action that has the consequence of depriving legitimate businesses their rights to bank accounts is a violation of constitutional due process – Community Financial Services Association of America v. FDIC, Federal Reserve, OCC (District of D.C. 2015) https://t.co/KI84Vb8qXS
— Stuart Alderoty (@s_alderoty) March 16, 2023
Per the Reuters report, bids for the bank were scheduled to end yesterday. Recall that the attorney had previously urged crypto startups to build outside the United States in light of the uncertain regulatory climate.