Cryptocurrency companies could have a harder time accessing traditional banking partners after the loss of two major crypto-friendly banks in less than a weekaccording to some members of the cryptocurrency community.
On March 12, the Federal Reserve announced the closure of Signature Bank as part of “decisive actions” to protect the US economy, citing “systemic risk”. It came just days after Silicon Valley Bank closed.which was ordered to close on March 10.
One week before, Silvergate Bank, another crypto-friendly bank, announced that it would close its doors and voluntarily liquidate on March 8..
At least two of these banks were considered important banking pillars for the crypto industry.. According to insurance documents, Signature Bank had $88.6 billion in deposits as of December 31.
Umm… so they shut down Signature bank…
Wasn’t that like one of the last big banks working with #crypto companies?
Guys? guys…
—Lark Davis (@TheCryptoLark) March 13, 2023
Umm… so they closed Signature bank… Wasn’t that like one of the last big banks working with cryptocurrency companies? Guys? Guys…
Crypto investor Scott Melker, aka The Wolf Of All Streets, believes – like many others who took to Twitter following the news – that the collapse of the three banks will leave crypto companies “basically” without banking options.
“Silvergate, Silicon Valley and Signature have closed. Depositors will be compensated, but there’s basically no one left to bank crypto companies in the US,” he said..
Silvergate, Silicon Valley and Signature all shuttered.
Depositors will be made whole, but there’s basically nobody left to bank crypto companies in the US.
— The Wolf Of All Streets (@scottmelker) March 12, 2023
Silvergate, Silicon Valley and Signature have closed.
Depositors will be compensated, but basically there is no one left to bank cryptocurrency in the US.”
Meltem Demirors, chief strategy officer at digital asset manager Coinshares, shared similar concerns on Twitter, noting that in just one week, “cryptocurrencies in America have run out of bank.” He noted that SEN and SigNet “are the hardest to replace”.
and just like that, crypto in america has been unbanked
Silvergate. Silicon Valley Bank. signature.
in one week pic.twitter.com/nWLDxdOAAA
— Meltem Demirors (@Melt_Dem) March 12, 2023
And just like that, cryptocurrencies in America have been unbanked. Silvergate. Silicon Valley Bank. signature. in a week pic.twitter.com/nWLDxdOAAA
Silvergate Exchange Network (SEN) and Signature Bank’s “Signet” were real-time payment platforms that allowed merchant crypto customers to make real-time, anytime dollar payments.
Its loss could mean that “cryptocurrency liquidity could be hurt,” according to comments by Nic Carter of Castle Island Ventures in a March 12 CNBC report. He said that both Signet and SEN were key for businesses to enter fiat, but I hoped other banks would step up to fill the gap.
Others believe that the closure of the three firms will create space for another bank to step up and fill the void..
Jake Chervinsky, policy officer at the Blockchain Association, a cryptopolitics advocate, said that Closing banks would create a “huge void” in the crypto-friendly banking market.
The closures of Silvergate, SVB, and Signature create a huge gap in the market for crypto-friendly banking.
There are many banks that can seize this opportunity without taking on the same risks as these three.
The question is if banking regulators will try to stand in the way.
—Jake Chervinsky (@jchervinsky) March 12, 2023
The closures of Silvergate, SVB and Signature create a huge void in the crypto-friendly banking market. There are many banks that can take advantage of this opportunity without taking the same risks as these three. The question is whether bank regulators will try to get in the way.
“There are many banks that can take advantage of this opportunity without taking the same risks as these three. The question is whether bank regulators will try to get in the way,” he added..
For his part, others have suggested that viable alternatives already exist.
This is false. United Texas Bank, Western Alliance Bank, JP Morgan Chase, and Bank of New York Mellon all have crypto businesses as customers, and there are probably more. https://t.co/Q27bkzq2n8
—yuga.eth (@yugacohler) March 13, 2023
This is false. United Texas Bank, Western Alliance Bank, JP Morgan Chase, and Bank of New York Mellon all have crypto companies as clients, and there are probably more. https://t.co/Q27bkzq2n8
Mike Bucella, a general partner at BlockTower Capital, told CNBC that many in the industry are already switching to Mercury Bank and Axos Bank.
“In the short term, crypto banking in North America is a tough place,” he said..
“However, there is a long line of good banks that can take over.”
Ryan Selkis, CEO of blockchain research firm Messari, he pointed that the incidents have seen “cryptocurrency bank rails” shut down in less than a week, with a warning about the future of USDC.
“Next USDC. The message from DC is clear: cryptocurrencies are not welcome here,” he said..
“The entire industry should be fighting like hell to protect and promote USDC from here on out. It is the last battle for cryptocurrencies in the US,” Selkis added.
Crypto’s banking rails have been effectively shuttered in less than a week. Next up, USDC.
The message from DC is clear: crypto is not welcome here.
—Ryan Selkis (@twobitidiot) March 12, 2023
The bank rails for cryptocurrencies have been closed in less than a week. The next step is the USDC. DC’s message is clear: cryptocurrencies are not welcome here.
Circle, the issuer of the USDC stablecoin, confirmed on March 10 that the transfers initiated to move their balances at Silicon Valley Bank had not yet been processed.leaving $3.3bn of its $40bn USDC reserves in SV.
The news caused the USDC to wobble against its peg, dipping below 90 cents at times on major exchanges..
However, As of March 13, the USDC returned to its $1 level after confirmation from its CEO, Jeremy Allaire, that its reserves are safe and that the company has new banking partners..
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