The recent turmoil in the U.S. banking industry has left crypto-companies searching high and low for new partner banks. Last week, Silvergate Capital, Silicon Valley Bank, and Signature Bank all shut down following regulatory intervention. This forced many users to move their assets elsewhere.
It is difficult to find alternatives to these banks as their instant payment platforms were critical for transactions 24*7. According to many, the current regulatory environment in the U.S indicates it is not best suited for the growth of the crypto-space.
Ark Invest’s Cathie Wood took to Twitter on 15 March to slam U.S. regulators for the banking crisis. According to the exec,
“Instead of blocking decentralized, transparent, auditable and well-functioning financial platforms with no central points of failure, regulators should have been focused on the centralized and opaque points of failure looming in the traditional banking system.”
Ripple CEO Brad Garlinghouse recently suggested that the crypto-industry has “already started moving outside” of the U.S. He claimed regulations put U.S. at “severe risk” of missing out on being an attractive hub for the evolution of crypto-innovation.
Following the chaos, Circle hired Cross River Bank as its new partner and expanded ties with others.
Additionally, according to reports, Digital Currency Group (DCG) is trying to find new banking partners for portfolio companies.
“Santander (SAN), HSBC (HSBA), Deutsche Bank (DB), BankProv, Bridge Bank, Mercury, Multis and Series Financial are still willing to connect with crypto firms.”
DCG has also reached out to international banks Revolut in UK, United Overseas Bank in Singapore, and Bank Leumi in Israel.
At this point, many other crypto-firms are possibly looking to move overseas as well. As regulations in countries like Germany, Switzerland, and Singapore are crypto-friendly, they might see an influx of companies. These countries do not impose capital gains taxes on crypto as well, making it equally desirable for private investors.
The latest in the series is crypto-bank Anchorage Digital announcing the layoffs of about 20% of its workforce, citing regulatory uncertainty in the United States.
Anchorage further added that regulatory dynamics are creating headwinds for its business and the crypto-industry. It is likely that more banks will have to take harsh measures to prop up their businesses.