Crypto companies could 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 Mar. 12, the Federal Reserve announced the closure of Signature Bank as part of “decisive actions” to protect the U.S. economy, citing “systemic risk.” It came only days after the closure of U.S. bank — Silicon Valley Bank — which was ordered to shut down on Mar. 10.
A week prior, Silvergate Bank, another crypto-friendly bank announced it would close its doors and voluntarily liquidate on Mar. 8.
At least two of these banks were seen as important banking pillars for the crypto industry. According to insurance documents, Signature Bank had $88.6 billion in deposits as of Dec. 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
Crypto investor Scott Melker, also known as The Wolf Of All Streets — like many others that took to Twitter following the news — believes the collapse of the three banks will leave crypto companies “basically” without banking options.
“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,” 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
Meltem Demirors, Chief Strategy Officer of digital asset manager Coinshares shared similar concerns on Twitter, highlighting that in just one week “crypto in america has been unbanked.” She noted that SEN and SigNet “are the most challenging 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
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 be somewhat impaired,” according to comments from Nic Carter of Castle Island Ventures in a Mar. 12 CNBC report. He noted that both Signet and SEN were key for firms to get fiat in, but hopes that…
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