Regulators tell prospective bidders for Signature Bank that they need to drop the firm's crypto business, report says

• Regulators want Signature Bank bidders to drop its crypto business, Reuters reported.
• Interested parties reportedly have until Friday to submit their bid for the failed lender.

Whoever buys Signature Bank, which was seized by regulators and will be auctioned off, must agree to give up its cryptocurrency business, sources told Reuters.

The Federal Deposit Insurance Corporation (FDIC) has asked parties interested in buying the shuttered bank to submit bids by Friday, the publication reported on Wednesday.

An FDIC spokesperson told Insider that the potential buyer determines the conditions of their bid, and informs the regulator which assets and liabilities from the defunct bank they are willing to take.

Signature was one of three specialist banks that closed last week. They also included Silicon Valley Bank, the second-largest banking failure to date, along with Silvergate Bank. All of the now-defunct firms serviced crypto-related clients.

Signature customers, spooked by the downfall of SVB, pulled over $10 billion in deposits last Friday. In shutting down Signature Bank, the New York Department of Financial Services said the move was done "in order to protect depositors," according to a statement.

But board member Barney Frank said the bank was still solvent and that regulators took over to send a "very strong anti-crypto message," he told CNBC.

He added: "We had no indication of problems until we got a deposit run late Friday, which was purely contagion from SVB."

Signature was reportedly under investigation for possible lax money-laundering monitoring by the Securities and Exchange Commission and the Department of Justice before it was seized.