- Signature Bank becomes the third largest cryptocurrency-friendly bank in the US to go bust.
- Signature, Silvergate, and Silicon Valley Bank All Failures Will Have Long-Term Repercussions for US Cryptocurrency
- Several cryptocurrency household names are now battling US regulators on one side and a banking meltdown on the other.
Bitcoin became popular in the aftermath of the 2008 banking crash as a way for individuals to avoid the impact of the failures of the central financial system. However, 15 years later, the banking crash has shaken the cryptocurrency ecosystem.
Last week saw massive bank closures as Signature Bank collapsed following Silvergate and Silicon Valley Bank. All of the banks have earned the reputation of being among the most crypto-friendly financial institutions in the United States.
Signature And Silverjet It enabled fast payments between customers and exchanges, supporting digital asset liquidity. The former ran Signet, a payment network that allowed commercial crypto customers to make real-time payments in dollars at any time, seven days a week.
The latter operates the Silvergate Exchange Network (SEN), allowing users, including hedge funds and crypto companies such as Coinbase, to transfer funds easily and instantly.
Meanwhile, USDC stablecoin issuer Circle said it has $3.3 billion in equity Silicon Valley Bank. Coinbase and Paxoswhich previously partnered with Binance in the BUSD stablecoin, admitted to holding a pooled balance of about $500 million in Silvergate before it went under.
As of the close of business on Friday, March 10, Coinbase had approximately $240 million in corporate cash in Signature. As stated by the FDIC, we expect a full refund of this money. https://t.co/XY5L7m4RMs
– Coinbase (coinbase) March 12, 2023
While most companies affected by the bank downturn are confident that there will be no harm to customers who hold funds with them, the long-term repercussions for cryptocurrency are worrying.
Austin Campbell, adjunct assistant professor of business at Columbia Business School, said bloomberg, “Crypto has basically been removed from banking, especially for 24/7 fast payout bars.” He added that encryption needs to “look to other jurisdictions in the future.”
The United States has become a hostile business ground for crypto firms due to hard police action from regulators. CoinbaseAnd PaxosAnd circle– now grappling with a banking crisis in the US – has also clashed with the Securities and Exchange Commission and other regulators.
Once the dust settles after the fall of these banks, and depositors are full, many crypto companies will be left looking for new banking partners. However, this can be difficult given the current regulatory landscape, and banks are presumably trying to avoid risks.
Silvergate, Silicon Valley, and Signature are all closed.
Depositors will be made full, but there is basically no one left for banking crypto companies in the US.
– wolf of all streets (scottmelker) March 12, 2023
on the flip side
- Since bitcoin hit a low of $19,662 on Friday, March 10, the major currency has surged to a high of $22,510 on Monday, March 13, off bad banking news over the weekend.
Why should you bother
Bitcoin’s principles of being decentralized and separate from banks remain true, but the cryptocurrency ecosystem has grown to be ingrained in the global financial system. The ever-increasing number of digital currencies and cryptocurrencies is still predominantly dominated by centralized exchanges, which are vulnerable to failures of the financial system.
Read more about the decline and collapse of Silvergate Bank:
Will troubled crypto bank Silvergate follow in FTX’s footsteps?
Read about Justin Sun’s bad withdrawal from Huobi:
Justin Sun Withdraws $60 Million From Huobi Amid HT Token Flash Crash
