Two months after the collapse of Silvergate Bank and Signature Bank, the crackdown on the U.S. crypto industry has intensified, and a new banking landscape is taking shape behind crypto companies.
In the United States, crypto companies are turning to a small number of regional banks to open accounts. Pennsylvania-based Customers Bancorp has become one of the new favorites. Banks in Switzerland and Asia are also playing a larger role, although they have not fully embraced clients from the cryptocurrency sector. In the United Kingdom, conditions for obtaining banking services have also deteriorated, and crypto companies have turned to payment service providers as an alternative. As a result, the new banking system for cryptocurrencies is more fragmented and no longer centered on the United States. Bloomberg interviewed more than a dozen industry participants, including banks, digital asset exchanges, trading firms, startups, and consultants, to compile a list of banks around the world that accept clients from the crypto industry. Following last year’s turmoil and increasingly rigorous regulatory scrutiny, mainstream U.S. banks have become more cautious about processing wire transfers and holding deposits for crypto companies. Silvergate, headquartered in La Jolla, California, and Signature, headquartered in New York, both closed in March. These two banks once supported the majority of the crypto industry’s banking business, and their collapse triggered a scramble among crypto companies to find alternatives. Rich Rosenblum, president and co-founder of cryptocurrency trading firm GSR, said: “It’s more of a bunch of bank names now, and you have to go there and do due diligence because they are not that well-known.” This week, the U.S. Securities and Exchange Commission (SEC) sued cryptocurrency exchanges Binance and Coinbase for violating its rules, delivering a strong blow to the industry’s largest players. Both companies denied the allegations and declared they would defend themselves in court. “These high-profile lawsuits have drawn attention and discussion to many issues in the crypto industry,” said John Popeo, a partner at the Gallatin Group, which advises banks and other companies on regulatory matters. “This could create more challenges for companies seeking banking partners, as those partners will conduct due diligence and examine other issues related to the company.” Cryptocurrency exchanges have historically found it difficult to find banking partners to hold deposits and facilitate wire transfers related to the buying and selling of digital assets.Losing access to banking services means cryptocurrency will become further isolated from the traditional financial industry.
J Austin Campbell, an adjunct professor at Columbia Business School who runs an independent advisory firm for crypto businesses, said banking for U.S. crypto companies has become worse than before 2018. He noted that banks want to open operating accounts for businesses without touching user funds, “but that is not feasible.” Nevertheless, the rebuilding of the crypto banking system is slowly underway. The good news is that the diversification of banking service providers could make the new system more resilient. According to Rosenblum of GSR, although banking services are not as seamless as they were a year ago, if one bank stops supporting cryptocurrency today, “you don’t need to recalibrate the entire system.” The following are banks that some cryptocurrency companies have turned to, categorized by region: United States Customers Bancorp Some of the largest cryptocurrency companies have turned to Customers Bancorp, a bank based in West Reading, Pennsylvania, led by founder and CEO Jay Sidhu. The bank began serving clients in the cryptocurrency space in late 2021, launching a real-time payment platform similar to Signature’s Signet to cater to the needs of trading firms, exchanges, and institutional investors, enabling them to settle dollar transfers related to cryptocurrency transactions around the clock. Circle Internet Financial, the issuer of the stablecoin USDC, now uses Customers Bancorp’s CBIT payment network for real-time settlement in U.S. dollars. Cryptocurrency exchanges Coinbase and Bitstamp USA, as well as trading firm GSR, are clients of Customers Bancorp. Cross River Bank This Fort Lee, New Jersey-based company, known for its close ties with fintech firms, provides banking services to some crypto companies, such as Coinbase and Circle. It also offers real-time fund transfers with a limit of $1 million per transaction. Company spokesperson Josh Vlasto said that while Cross River is seeing an increasing number of partners and businesses seeking banking services, the company only considers existing partners and “blue-chip clients that are integral to the fintech ecosystem.”Western Alliance
Headquartered in Phoenix, Arizona, Western Alliance has a blockchain and digital assets team serving clients in the cryptocurrency industry. It also offers real-time payment capabilities powered by Tassat. A representative said in an email that the bank takes “a very deliberate approach” to its choice of whom to serve. Axos Financial This Las Vegas, Nevada-based bank holds accounts for some cryptocurrency companies. According to the U.S. Securities and Exchange Commission’s lawsuit against Binance.US, Axos Financial is one of the banks that provide services to Binance.US. The bank earlier planned to expand into broader cryptocurrency-related businesses, including supporting retail crypto trading and launching a stablecoin, but those plans have now been shelved. “Given the changes in the market over the past year, Axos currently has no plans to support retail crypto trading, provide clearing and trading services, or launch a stablecoin,” said Johnny Lai, senior vice president of corporate development and investor relations at Axos, in an email. “We do not expect these plans to change in the near term.” FV Bank International FV Bank, registered in the U.S. territory of Puerto Rico, is the first bank in the Commonwealth to launch digital asset custody services. It allows clients to hold bitcoin and U.S. dollars in the same bank account. It is initiating settlement of certain cryptocurrencies against the U.S. dollar, primarily through third-party brokers. Asia Standard Chartered Standard Chartered is aggressively advancing in some emerging markets. It holds majority stakes in two UK subsidiaries: crypto trading platform Zodia Markets and custody arm Zodia Custody, the latter completing a $36 million funding round led by Japan’s SBI Holdings in April. Rene Michau, the bank’s global head of digital assets, said London-based Standard Chartered provides banking services to “carefully selected” digital asset service providers and supports them in enabling fund flows for users of their platforms. “We view digital assets as a key component of future financial services,” Michau said in an email. The bank’s services for digital asset companies include corporate accounts, customer fund accounts, and foreign exchange, primarily in Singapore, Hong Kong, and the United Arab Emirates.DBS DBS Bank is the largest bank in Singapore and the largest listed company in Singapore. It was established in 1968, three years after Singapore separated from Malaysia and became an independent country. The bank provides deposit accounts for regulated digital asset and blockchain companies. It also stated in a statement that it provides fund inflow and outflow services for enterprises, institutions, and accredited clients through its own digital platform, DBS Digital Exchange. ZA Bank ZA Bank is the largest virtual bank in Hong Kong and plans to offer token-to-fiat currency exchange services through licensed exchanges. Founded by Chinese billionaire Ou Yaping and others, ZA Bank will act as a settlement bank for clients, allowing them to withdraw Hong Kong dollars, Chinese yuan, and US dollars after depositing cryptocurrencies on exchanges. Currently, it provides fund inflow and outflow services for two licensed exchanges in Hong Kong: OSL and HashKey. Europe and the UK BCB Group London-based BCB Group provides clients with access to its digital asset institutional payment network. The network, named Blinc, operates in a manner similar to Silvergate’s now-defunct SEN, allowing members to pay each other instantly in multiple currencies. This payment service provider offers commercial accounts, over-the-counter cryptocurrency and fiat trading, and digital asset custody services to clients including exchanges, market makers, lenders, funds, brokers, and traders. Bank Frick Bank Frick, located in Liechtenstein, provides banking services to crypto enterprises, such as commercial accounts for established companies and startups in the blockchain and cryptocurrency space. It also offers trading and custody of specific tokens, including Bitcoin and Ether. Bloomberg reported at the end of last month that Binance had been discussing a proposal to allow some of its institutional clients to place trading collateral in banks, and Bank Frick was one of the potential intermediaries mentioned. Bank Frick declined to comment on the matter. Seba Bank This Swiss company provides trading, structured product investments, custody and lending services for digital and traditional assets to individual, corporate, and institutional clients. Similar to traditional banks, Seba offers time deposit accounts and payment services, but it also provides crypto investment tracking and crypto credit cards for consumption. The company stated in March that after the collapse of Signature and Silvergate, global traffic to the bank’s website increased significantly, especially traffic from the United States, adding that crypto companies were applying for accounts at the bank.
Seba Managing Director Yves Longchamp stated: “The direct result of the current market landscape is a significant inflow of funds to us, as we recognize that clients’ digital wealth should be managed in the same way as traditional finances.”
Sygnum Bank Operating across Switzerland and Singapore, Sygnum Bank specializes in digital asset services for institutional and private qualified investors, corporate clients, and financial institutions. It provides custody, brokerage, tokenization, asset management, lending, and commercial banking services, facilitating deposits in Swiss francs, euros, Singapore dollars, and US dollars to support the purchase, trading, and holding of cryptocurrencies. The company’s co-founder and Group CEO Mathias Imbach commented: “We continue to see growing inquiries from institutional investors, asset managers, and blockchain-related projects looking to diversify their crypto investments through trusted Swiss partners such as Sygnum Bank.” Clear Junction Payment service provider Clear Junction offers financial institutions, including cryptocurrency companies, access to UK accounts, virtual international bank account numbers, payment networks, currency exchange, and e-wallets. Companies can receive deposits for purchasing cryptocurrencies, accept payments via traditional bank transfers, and hold funds in their own name using so-called agent accounts. Statement: This article represents only the author’s personal views and opinions, and does not represent the views or positions of this website. All content and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and transactions. The author and this website shall not bear any direct or indirect liability for losses arising from investors’ transactions. Disclaimer: This article is provided solely for market information. All content and opinions are for reference only and do not constitute investment advice, nor do they represent the views or positions of this website. Investors should make their own decisions and transactions. The author and this website shall not bear any direct or indirect liability for losses arising from investors’ transactions.
