Nobody Left To Bank Crypto Companies
Crypto businesses may find it difficult to access traditional banking partners as two major crypto-friendly banks disappear within a week, according to some members of the crypto community.
On March 12, the Federal Reserve Board announced the closure of Signature Bank as part of a “decisive action” to protect the US economy, citing “systemic risk.” That was just days after the shutdown of Silicon Valley Bank, which was ordered to close on March 10.
A week ago, another crypto-friendly bank, Silvergate Bank, announced it would close on March 8 and enter into voluntary liquidation.
At least two of these banks are considered important banking pillars of the crypto industry. Signature Bank said he had $88.6 billion in deposits as of Dec. 31, according to insurance records.
The recent announcement by Barclays Bank that it would no longer provide banking services to cryptocurrency companies has sparked a strong reaction from the crypto community. Many are concerned that this move will make it even more difficult for crypto companies to operate, as few traditional banks are willing to work with them.
Some point out that this move is another example of the perceived bias against a cryptocurrency from the traditional banking sector. This bias has been seen in many cases where banks have refused to work with cryptocurrency companies or even close the accounts of customers who engage in crypto-related transactions.
Others are taking a more proactive approach, suggesting that the crypto industry may need to create its banking system, perhaps using blockchain technology to provide financial services to crypto companies.
Some are also questioning the legality of the move by Barclays, suggesting that it could violate anti-trust laws by limiting competition in the financial industry.
Crypto investor Scott Melker, also known as The Wolf Of All Streets, said, like many others who took to Twitter after the news, that the three bank failures left crypto companies “essentially, I think that the bank option will be gone.
Crypto investor Scott Melker, also known as The Wolf Of All Streets, said, like many others who took to Twitter after the news, that the three bank failures left crypto companies “essentially, I think that the bank option will be gone.
BlockTower Capital general partner Mike Bucella told CNBC that much of the industry has already moved to Mercury Bank and Axos Bank.
“Silvergate, Silicon Valley, and Signature have all closed. Depositors are recovering, but basically, no one is left to bank with US crypto companies,” he said.
Silvergate Exchange Network (SEN) and Signature Bank’s “Signet” was a real-time payment platform that enabled commercial cryptocurrency customers to make real-time dollar payments at any time.
The reaction to this news from the crypto community has been one of concern and frustration. Many are worried that the lack of banking services will make it more difficult for crypto companies to grow and succeed and could even result in some companies being forced to shut down. However, there is also a sense of determination to find new solutions and overcome the challenges facing the crypto industry.