Crypto banking firm BCB prepares US dollar payments to close Silvergate Gap
BCB Group, a payment processor that connects crypto companies to the banking system, is accelerating plans to add US dollar capabilities to fill the gap left by the recently closed Silvergate Exchange Network (SEN), CEO Oliver von Landsberg-Sadie said in an interview with CoinDesk.
London-based BCB, which was the first crypto company to receive a payments license from UK regulator the Financial Conduct Authority (FCA), offers fiat-to-crypto rails for currencies including sterling, euro, Swiss franc and yen in Europe, specifically to institutional players such as Bitstamp, Galaxy Digital, Gemini and Kraken.
Banking has been a difficult problem for crypto companies, many of which see the reinvention of traditional finance as their ultimate goal. Recent collapses and scandals have led to a scattered response from regulators in the US, and what can be seen as a sort of choke point operation on crypto banking, at least as far as Silvergate is concerned.
BCB launched its instant settlement network, the BCB Liquidity Interchange Network Consortium (BLINC), in mid-2020. It is a real-time gross settlement system that does for euros, British pounds and Swiss francs what SEN did in the US until recently for large crypto clients trading in dollars .
It’s worth noting that NYC-based Signature Bank’s Signet, equivalent to SEN, has been the second-largest USD instant settlement network to date and stands to cover some of the demand. That said, a BLINC dollar component has been in the works for about a year and is ready for launch, Landsberg-Sadie said.
“Obviously I’ll try to bring it forward as quickly as possible,” he said, referring to the news that Silvergate’s network is no longer running. “I would like to say it could be live by spring, so we will do whatever it takes to ensure that those stranded by special education have some sort of continuity given the huge overlap of BCB and Silvergate customers.”
The main differences between BLINC and SEN are that the former is multi-currency and is not tied to a single credit institution, such as a Silvergate or Signature Bank, Landsberg-Sadie said. It was not designed to take deposits, he added, having been purpose-built as a payments institution, providing accruals to a collection of banks in places such as Britain, Switzerland and Europe.
“It’s a decentralized model,” Landsberg-Sadie said. “What you have with Silvergate and Signature is a credit institution solution applied to what is primarily a payment problem. Silvergate’s problems started when they allowed long-term bitcoin bets against short-term cash deposits, an impossible position to relax in 2022’s crazy markets. The BLINC Funds are 1:1, unsecured, non-rehypothecated, always exactly 1:1 with secured funds.”
