<p class="p1"><span class="s1">Members of the House Financial Services Committee pressed Federal Deposit Insurance Corp. Chair Martin Gruenberg over his agency's handling of Signature Bank's digital asset-related business. </span></p> <p>The FDIC assumed control of Signature earlier this month after state regulators shut the institution down over bank run concerns. <span class="s1">The bank regulatory agency currently controls a 'bridge bank' meant to temporarily continue Signature's services without significant disruption until the bank or its assets can be sold off. </span></p> <p class="p1"><span class="s1">Gruenberg affirmed that the FDIC would not block a buyer for Signet </span><span class="s1">if part of an acquisition. Another New York bank <a href="https://www.fdic.gov/news/press-releases/2023/pr23021.html">has agreed</a> to assume a large chunk of Signature's deposits, though Gruenberg made clear the deal does not include the majority of Signature's digital asset business.</span></p> <p>Pressed by Rep. Andrew Garbarino, R-N.Y., as to why Signature's digital asset deposits weren't included in the recent sale, Gruenberg replied that the winning bidder for Signature's deposits didn't want them. </p> <p><span style="font-weight: 400;">“The winning bid chose not to bid on the digital assets, and there were about $4 billion of those,” said Gruenberg, who added that the agency is in the process of marketing Signet, Signature's crypto-focused payments network, for sale. </span></p> <p><span style="font-weight: 400;">“It’s my understanding that Signet was not acquired and is in the process now of being marketed,” said the FDIC chair. Gruenberg added that the agency plans to return the $4 billion in crypto-related deposits to customers next week. </span></p> <p><span style="font-weight: 400;">Asked by Rep. Tom Emmer, R-Minn., about Silicon Valley Bank's digital asset customers, Gruenberg said that the bidder in that case took on all of the failed bank's deposits, in contrast to the partial bid that the FDIC received for some of Signature's deposits. </span></p> <h2>Government didn't see crypto causing bank failures</h2> <p>Though Silicon Valley and Signature Banks had digital asset industry customers, regulators have not said that crypto played a role in the bank failures, instead characterizing the failures as similar to traditional bank runs of the past, only faster.</p> <p>That did not change when asked explicitly if crypto caused those two failures. Pressed on that, Treasury Undersecretary of Domestic Finance Nellie Liang said that the government did not see cryptocurrencies or digital assets playing a role in either bank failure. </p> <p>Gruenberg notably did not specifically blame exposure to crypto assets in the failure of Silvergate Bank, which voluntarily shut down after losses from its holding of the stablecoin diem and large customer withdrawals due to scrutiny of its management of accounts held by FTX and Alameda Research.</p> <p>During testimony on Wednesday he also denied that regulators had told banks that take on digital asset clients that they would be tougher on them, a criticism levied by some crypto advocates, including Emmer, in recent months. </p> <p class="p1"><span class="s1">“Has the FDIC ever communicated implicitly or explicitly to any banks that their supervision will be more onerous in any way if they take on new or maintain existing digital asset clients?” Emmer asked. </span></p> <p class="p1"><span class="s1">"No," replied Gruenberg. </span></p> <p class="p1"><span class="s1">New York state regulators seized Signature Bank earlier this month after a run on the bank following the collapse of tech-friendly Silicon Valley Bank. </span></p> <p class="p1"><span class="s1">F</span><span class="s1">ormer Rep. Barney Frank, an author of a major financial regulation law and a member of the bank’s board, criticized the state-level decision by arguing that regulators “wanted to <a href="https://www.theblock.co/post/219391/barney-frank-regulators-shuttered-signature-bank-to-show-crypto-is-toxic"><span class="s2">send the message that crypto is toxic</span></a>.” </span><span class="s1"> </span></p> <p><em>UPDATE: To reflect Liang's remarks. </em></p> <p><em>Additional reporting by Colin Wilhelm</em></p><br /><span class="copyright"><p>© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.</p> </span>