“No one left to bank crypto companies” – Crypto Twitter reacts
Crypto companies may find it harder to access traditional banking partners with the loss of two major crypto-friendly banks in less than a week, according to some in the crypto 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 risks”. It came just days after the closure of the US bank – Silicon Valley Bank – which was ordered to close on March 10.
A 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 seen as important banking pillars for the crypto industry. According to insurance filings, Signature Bank had $88.6 billion in deposits as of Dec. 31.
Crypto investor Scott Melker, aka The Wolf Of All Streets – like many others who took to Twitter following the news – believes the collapse of the three banks will leave crypto companies “basically” unbanked.
“Silvergate, Silicon Valley and Signature were all shut down. Depositors will be made whole, but there is basically no one left to bank crypto companies in the US,” he said.
Meltem Demirors, Chief Strategy Officer for digital asset manager Coinshares shared similar concerns on Twitter, highlighting that “crypto in America has been freed in just a week.” She noted that SEN and SigNet “are the most challenging to replace.”
The Silvergate Exchange Network (SEN) and Signature Bank’s “Signet” were real-time payment platforms that allowed commercial crypto clients to make real-time payments in dollars at any time.
Their loss could mean that “crypto liquidity could weaken somewhat,” according to comments from Nic Carter of Castle Island Ventures in a March 12 CNBC report. He noted that both Signet and SEN were key for firms to get fiat, but hopes that other banks will step up to fill the void.
Others believe that the closure of the three firms will create room for another bank to step up and fill the vacuum.
Jake Chervinsky, head of policy at crypto policy promoter Blockchain Association, said the closure of the banks would create a “huge gap” in the market for crypto-friendly banking services.
“There are many banks that can seize this opportunity without taking the same risk as these three. The question is whether bank regulators will try to stand in the way, he added.
Meanwhile, others have proposed there are already viable alternatives out there.
Mike Bucella, General Partner at BlockTower Capital, told CNBC that many in the industry are already switching to Mercury Bank and Axos Bank.
“Crypto banking in the short term in North America is a tough place,” he said.
“But there is a long tail of challenger banks that could pick up on that weakness.”
Ryan Selkis, CEO of blockchain research firm Messari, noted events have seen ‘Crypto’s banking rails’ shut down in less than a week, with a warning about the future of USDC
“Next up, USDC. The message from DC is clear: crypto is not welcome here,” he said.
“The entire industry should be fighting like hell to protect and promote USDC from here on out. It’s the last stand for crypto in the US,” Selkis added.
Circle, the issuer of stablecoin USDC, confirmed on March 10 that wires started to remove balances have not yet been processed, leaving $3.3 billion of its $40 billion USDC reserves with Silicon Valley Bank (SVB).
Related: Silicon Valley Bank Collapse: Everything That Has Happened So Far
The news sent the USDC reeling against the peg, at times falling below 90 cents on major exchanges.
But as of March 13, USDC is climbing back to its $1 peg following confirmation from CEO Jeremy Allaire that reserves are safe and the firm has new banking partners lined up.
