• On March 2, five crypto firms, including Coinbase and Paxos, ended their partnership with Silvergate Bank due to ongoing investigations and lawsuits against the bank.
• Digital Asset Capital Management (DACM), a crypto hedge fund with assets worth over $400 million, is now looking for an alternate banking partner in Switzerland.
• Signature Bank might be the next popular fintech bank of choice for crypto companies, but it has already announced its intention to withdraw up to $10 billion in deposits from clients holding digital assets.
Coinbase Cuts Ties to Silvergate Bank
On March 3, five well-known cryptocurrency firms – Coinbase, Paxos, Gemini, BitStamp and Galaxy Digital – all cut ties with Silvergate Bank after multiple investigations and lawsuits were filed against the institution.
Crypto Hedge Fund Seeks New Partner
The termination of service by Coinbase has forced Digital Asset Capital Management (DACM), a crypto hedge fund with assets worth over $400 million, to look for a new banking partner in Switzerland. DACM used Silvergate’s real-time network to move funds between Coinbase Global’s platform and other institutions.
Signature Bank as Potential Alternative
Signature Bank could be the next most popular option for those dealing in cryptocurrencies; however, it should be noted that the bank has already announced its intention to withdraw up to $10 billion in deposits from clients holding digital assets.
Switzerland as Regulatory Haven
Switzerland was one of the first countries to regulate and offer banking licenses specifically tailored towards cryptocurrency-focused businesses. SEBA Bank AG is just one example of such an institution; it secured a banking and securities dealer license from the Swiss Financial Market Supervisory Authority back in August 2019.
Silvergate Popularity Due To Real-Time Services
Silvergate was so popular with cryptocurrency companies because of its instant and real-time bank transfer services; without them moving funds around could take longer than usual. With Signature Bank potentially being out of reach soon too, companies may have difficulty finding suitable alternatives this time around.