Crypto Banking Gets a Boost as Traditional Banks Step Back

Traditional Banks Step Back

• Traditional banks are becoming more cautious about servicing the cryptocurrency industry.
• This has led to regional banks and alternative payment service providers stepping up to fill the gap.
• After the collapse of some crypto-friendly banks, a scramble among cryptocurrency firms to find other banking alternatives ensued.

US Crypto-Friendly Banks

In the US, Customers Bancorp, a Pennsylvania-based lender, has launched a real-time payment platform to support the settlement of US dollar transfers underlying cryptocurrency transactions. Other US lenders that have provided banking services to some cryptocurrency companies include Cross River Bank, Western Alliance Bancorp, and Axos Financial.

Collapse of Crypto-Friendly Banks

The change in the banking landscape came after the collapse of some crypto-friendly banks led to increased scrutiny of those providing services to crypto companies. Silvergate Bank announced its liquidation on March 8 after struggling for several months in the wake of FTX’s collapse. Just two days later Silicon Vally Bank suffered from a bank run and federal regulators shut Signature Bank down on March 12 due to fears of continued contagion.

Banking Alternatives Around The World

In Asia, Standard Chartered provides banking services to digital asset service providers in Singapore, Hong Kong, and the UAE while DBS Group offers deposit accounts for regulated digital asset and blockchain firms. Meanwhile in Hong Kong ZA Bank plans token-to-fiat currency conversions over licensed exchanges as well as account services for digital sector players. In Europe Liechtenstein’s Bank Frick & Co offers banking services as well as custodial solutions for cryptocurrencies while London Block Exchange provides debit cards linked with individual wallets allowing users spend their cryptocurrencies wherever Mastercard is accepted.

Conclusion

With traditional banks pulling back from serving cryptocurrency companies due to increased scrutiny following several bank collapses, smaller regional banks and alternative payment service providers are stepping up around the world to fill this gap in crypto banking services.