US crypto firms seek Swiss banking partners amid banking collapse
By Elizabeth Howcroft
LONDON (Reuters) – U.S.-based crypto firms are trying to open Swiss bank accounts after the collapse of two U.S. crypto-focused banks made it harder for them to use U.S. lenders, but bankers said the Swiss firms may not take them.
Crypto-focused US bank Silvergate Capital Corp said it planned to close last week after it was hit by losses following the dramatic collapse of crypto exchange FTX last November.
Its shutdown was followed by the collapse on Sunday of Signature Bank – seen as US crypto firms’ main alternative to Silvergate – in one of the biggest failures in US banking history.
The global banking sector was thrown into turmoil by Friday’s collapse of Silicon Valley Bank, which sent global bank shares tumbling on Monday amid concerns of further contagion. The tech-focused lender also bankrolled crypto companies and was the second largest US bank failure.
Crypto analysts said the closure of US banks, along with a regulatory crackdown in the US, would push firms to seek banking partnerships in Europe, Asia and “offshore”.
“US regulators have issued several warnings to banks about the potential risks of working with crypto companies. They have not banned it explicitly, but made it clear that this would be frowned upon,” said Ivan Kachkovski, crypto and currency analyst at UBS.
“This will likely push crypto companies to other jurisdictions in search of non-US banks willing to partner with the industry.”
Switzerland, long known for its private banking sector, has also been one of the more welcoming countries in Europe for crypto firms, with the Swiss city of Zug dubbed the “Crypto Valley”.
Yves Longchamp, CEO of the crypto-focused SEBA Bank in Switzerland said that there had been a “pronounced increase” in traffic to the bank’s website from the United States, and that in a global call on Friday representatives from Singapore, Hong Kong, Abu Dhabi, and Switzerland offices all said they had seen increased interest from potential customers.
“Crypto firms and other money managers have already started the onboarding process and many conversations are planned in the next weeks,” he said via email.
Switzerland-based Arab Bank said it saw an increase in US firms, mostly crypto funds or involved in crypto venture capital, seeking to open accounts in recent weeks as doubts about Silvergate grew. Rani Jabban, head of finance and financial institutions at Arab Bank, said around 80% of them had been Silvergate customers.
“We’ve had 10-20 requests so far … but that doesn’t mean we can accommodate and open accounts for all of them,” he said, citing regulatory difficulties in onboarding US customers and estimating that only one or two of them eventually would become Arab Bank customers.
Crypto firms relied on Silvergate’s crypto payment network, the Silvergate Exchange Network, which allowed round-the-clock transfers between investors and crypto exchanges, unlike traditional wire transfers, which can often take days to settle.
“I don’t see any banks also offering the structure that Signature and Silvergate offered with their internal blockchain 24/7 settlement,” said Arab Bank’s Rani.
Swiss bank Sygnum, which describes itself on its website as “the world’s first digital asset bank”, is sticking to its policy of not taking on US clients “due to a lack of regulatory clarity”, Sygnum’s head of marketing Dominic Castley told Reuters by e-mail. .
(Reporting by Elizabeth Howcroft; Editing by Sharon Singleton)
