The United States has reportedly expressed reluctance to cooperate with crypto users. This worry has grown as a result of the recent run of regional loan failures and increased regulatory monitoring of the cryptocurrency market.
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The Cause of the Worries
Many cryptocurrency businesses are now having trouble finding new banks to use as depository and payment institutions. This situation is one of the obvious effects of the takeover of Signature Bank and closure of crypto-friendly Silvergate Capital Corp.
Although there was no formal blanket ban on serving crypto clients, several financial institutions chose to impose lengthy application procedures and to reject smaller companies and some retail platforms. According to industry participants, investors, and bank executives, there are even situations when they are completely prohibiting cryptocurrency-related firms.
United States Banks Stays Away From Crypto Community
The Cross River Bank is one American bank that has recently distanced itself from the current scene. Within days of Silicon Valley Bank and Signature of SVB Financial Group collapsing, it is said to have received requests from more than 100 new clients, not all of which were fintech startups, who are apparently looking for a safe harbor for their deposits.
According to someone with firsthand knowledge of the bank’s operations, Cross River Bank has denied nearly all of those petitions. As per Eden Hoffman, a spokesman for the lender situated in Fort Lee, New Jersey, the said bank is only examining businesses that have current business agreements with Cross River and are blue-chip clients and essential parts of the fintech ecosystem.
Stablecoin issuer Circle Internet Finance, which expanded a collaboration with Cross River and announced after Silicon Valley Bank failed, is one of the few fintech businesses to have won over the bank.
Lenders Appeal to FDIC
Lenders are said to have made an appeal to the regulator not to take on the digital assets company while purportedly trying to purchase the bankrupt Signature Bank from the Federal Deposit Insurance Corp. at the beginning of the month.
Thankfully, the ultimate acquisition by New York Community Bancorp excludes Signature’s cryptocurrency operations. However, it is important to note that the FDIC is still looking to sell Signet, Signature’s real-time payments network for digital assets businesses.
Nic Carter, a general partner at the crypto venture capital firm Castle Island Ventures, continued by stating that no bank would want to volunteer and assert that they are the ones protecting the cryptocurrency business in light of recent events. “No bank wants to be considered the next Silvergate or Signature,” he continued.