After the collapse of Silvergate and Signature, a new landscape for crypto banking is emerging

Original Title: 《Crypto Weekend Slump Compounds Jitters of Investors Already on Edge》

Authors: Yueqi Yang, Suvashree Ghosh, and Emily Nicolle, Bloomberg
Compiled by: Luffy, Foresight News
Two months after the collapse of Silvergate Bank and Signature Bank, the pressure on the U.S. crypto industry continues to mount, with a new banking landscape forming behind crypto companies.

In the U.S., crypto companies are turning to a handful of smaller regional banks to open accounts. Customers Bancorp, based in Pennsylvania, has become one of the new favorites. Banks in Switzerland and Asia are also playing a larger role, although they have not fully opened their doors to clients from the cryptocurrency sector. In the UK, the conditions for obtaining banking services have also worsened, leading crypto companies to seek alternatives in payment service providers.

As a result, the new banking system for cryptocurrencies is becoming more decentralized and is no longer U.S.-centric. Bloomberg interviewed over a dozen industry participants, including banks, digital asset exchanges, trading firms, startups, and consultants, to compile a list of banks worldwide that accept clients from the crypto industry.

Following last year's turmoil and increasingly stringent regulatory scrutiny, mainstream banks in the U.S. have become more cautious about processing wire transfers and holding deposits for crypto companies. Silvergate, based in La Jolla, California, and Signature, based in New York, closed in March, and these two banks previously supported most of the banking operations in the crypto industry, triggering a scramble among crypto companies to find alternatives.

Rich Rosenblum, president and co-founder of crypto trading firm GSR, said, "Now there are more names of banks you have to go do due diligence on because they are not as 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 largest players in the industry. Both companies denied the allegations and claimed they would defend themselves in court.

"These high-profile lawsuits have sparked discussions and concerns about many issues in the crypto industry," said John Popeo, a partner at Gallatin Group, which advises banks and other companies on regulatory matters.

"This could pose more challenges for companies looking for banking partners, as these partners will conduct due diligence and investigate other issues related to the company."

Cryptocurrency exchanges have historically struggled to find banking partners to store deposits and facilitate remittances related to digital asset trading. Losing banking services means that cryptocurrencies will become further isolated from traditional finance.

J. Austin Campbell, a part-time professor at Columbia Business School who runs an independent consulting firm for crypto businesses, stated that banking for U.S. crypto companies has worsened compared to before 2018. He noted that banks want to open operational accounts for businesses without touching user funds, "but that's not feasible."

Nevertheless, the reconstruction of the crypto banking system is slowly underway. The good news is that the diversification of banking service providers means the new system may be more resilient. GSR's Rosenblum said that while banking services are not as seamless as they were a year ago, if a bank stops supporting cryptocurrencies today, "you don't need to reconfigure the system."

Here are some banks that cryptocurrency companies are turning 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 at the end of 2021, launching a real-time payment platform similar to Signature's Signet to meet the needs of trading firms, exchanges, and institutional investors, allowing them to settle dollar transfers related to cryptocurrency trades around the clock.

Circle Internet Financial, the issuer of the stablecoin USDC, now uses Customers Bancorp's CBIT payment network for real-time dollar settlements. Cryptocurrency exchanges Coinbase and Bitstamp USA, as well as trading firm GSR, are all clients of Customers Bancorp.

Cross River Bank

This company, based in Fort Lee, New Jersey, is known for its close ties with fintech companies and provides banking services to some crypto firms, such as Coinbase and Circle. It also offers real-time fund transfers with a transaction limit of $1 million.

Company spokesperson Josh Vlasto said that while Cross River is seeing more partners and businesses seeking banking services, the company only considers existing partners and "blue-chip clients that are essential to the fintech ecosystem."

Western Alliance

Western Alliance, headquartered in Phoenix, Arizona, has a blockchain and digital asset team that serves clients in the crypto industry. It also offers real-time payment capabilities powered by Tassat. A representative said in an email that the bank "takes a very cautious approach to selecting its clients."

Axos Financial

This bank, based in Las Vegas, Nevada, has opened accounts for some crypto companies. According to the SEC's lawsuit against Binance.US, Axos Financial is one of the banks serving Binance.US. The bank had previously planned to expand its broader cryptocurrency-related business, including supporting retail cryptocurrency trading and launching stablecoins, but those plans are now on hold.

"Given the changes in the market last year, Axos currently has no plans to support retail cryptocurrency trading, provide clearing and trading services, or launch stablecoins," 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 short 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 both Bitcoin and U.S. dollars in the same bank account. It is initiating settlements for certain cryptocurrencies against the dollar, primarily through third-party brokers.

Asia

Standard Chartered

Standard Chartered is aggressively pursuing some emerging markets. It holds a majority stake in two UK subsidiaries, the cryptocurrency trading platform Zodia Markets and the custody division Zodia Custody, which completed a $36 million funding round led by Japan's SBI Holdings in April.

Rene Michau, global head of digital assets at Standard Chartered, stated that the London-based bank provides banking services to "carefully selected" digital asset service providers and supports them in offering funding services for their platform users.

"We view digital assets as an important part of the future of financial services," Michau said in an email. The bank's services for digital asset companies include corporate accounts, client funds accounts, and foreign exchange, primarily serving Singapore, Hong Kong, and the United Arab Emirates.

DBS Bank

DBS Bank is Singapore's largest bank and also the largest listed company in Singapore. It was established in 1968, the third year after Singapore separated from Malaysia and became an independent nation.

The bank offers deposit accounts for regulated digital asset and blockchain companies. It also stated in a statement that it provides funding services for businesses, institutions, and accredited clients through its own digital platform, DBS Digital Exchange.

ZA Bank

ZA Bank is Hong Kong's largest virtual bank and plans to offer token-to-fiat currency exchange services through licensed exchanges.

Founded by Chinese billionaire Ou Yaping, ZA Bank will act as a settlement bank for clients, allowing them to withdraw fiat currencies from Hong Kong, China, and the U.S. after depositing cryptocurrencies on the exchange. Currently, it provides funding services for two licensed exchanges in Hong Kong—OSL and HashKey.

Europe, UK

BCB Group

BCB Group, based in London, provides clients access to its digital asset institutional payment network. This network, called Blinc, operates similarly to Silvergate's now-defunct SEN, allowing members to make instant payments to each other 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 businesses, such as commercial accounts for established companies and startups in the blockchain and cryptocurrency space. It also offers trading and custody for specific tokens, including Bitcoin and Ethereum.

Bloomberg reported at the end of last month that Binance has been discussing a proposal allowing some of its institutional clients to deposit trading collateral at banks, with Bank Frick mentioned as one of the potential intermediaries. Bank Frick declined to comment on the matter.

Seba Bank

This Swiss company offers trading, structured product investments, custody, and lending services for individual, corporate, and institutional clients for both digital and traditional assets.

Like traditional banks, Seba offers savings accounts and payment services, but it also provides crypto investment tracking and crypto credit cards for consumption. The company stated in March that global traffic to its banking website significantly increased after the closures of Signature and Silvergate, particularly from the U.S., and added that crypto companies are applying for accounts with the bank.

Yves Longchamp, managing director of Seba, said, "The direct result of the current market landscape is a significant influx of funds to us, as we realize that clients' digital wealth should be managed in the same way as traditional finances."

Sygnum Bank

Sygnum Bank, located in Switzerland and Singapore, specializes in providing digital asset services for institutional and private qualified investors, corporate clients, and financial institutions. It offers custody, brokerage, tokenization, asset management, lending, and commercial banking services, facilitating deposits in Swiss francs, euros, Singapore dollars, and U.S. dollars to help purchase, trade, and hold cryptocurrencies.

Mathias Imbach, co-founder and group CEO of the company, stated, "We are seeing a continuous increase in inquiries from institutional investors, asset management firms, and blockchain projects related to diversification of crypto investments through trusted Swiss partners like Sygnum Bank."

Clear Junction

Payment service provider Clear Junction offers financial institutions, including cryptocurrency companies, access to UK accounts, virtual international bank accounts, payment networks, currency exchange, and e-wallet services. Companies can receive deposits for purchasing cryptocurrencies, accept payments using traditional bank transfers, and hold funds in their name using so-called agency accounts.