The collapse of a major payments system run by ailing US lender Silvergate Capital Corp has left a crypto fund manager with $400M looking for Swiss banks to assist in filling the void. Silvergate’s round-the-clock, real-time network set the Digital Asset Capital Management on the start to transfer funds between Coinbase Global Inc’s platform and Silvergate. Crypto.com, Coinbase, and Gemini are some of the platforms that have said they won’t accept or launch Silvergate payments.
Richard Galvin is the co-founder of Digital Asset Capital Management. In a Friday interview, he said that certain banks handle crypto transactions but are not crypto-focused. He added that they’re reaching a number of Swiss banks right now.
Galvin noted that the worries over Silvergate have “elevated the difficulty level” of transferring money to crypto exchanges. He further argued that although the network allows for instant money transfers between accounts, exchanges, and otc trading desks, the process of transporting funds may still require a longer time.
What caused the change of hearts?
Traditional banks have long been a barrier to the crypto industry’s easy access. The inherent volatility of digital assets, as well as the potential for government crackdowns, continue to worry a number of them. The collapse of the FTX exchange in November created a void that Silvergate attempted to occupy. Unfortunately, it found itself succumbing to the same fate.
In the aftermath of FTX’s bankruptcy last year, Silvergate experienced a run on deposits. The bank revealed this week that it is assessing its viability as a business.
Among the banks that service the digital-asset industry in Switzerland are SEBA Bank AG and Sygnum Bank AG. Deltec Bank and Trust in the Bahamas, as well as Capital Union Bank in the Bahamas, have a fair reputation for their cryptocurrency focus.
As a method to quickly expand deposits and access zero-cost funding, some smaller banks in the United States attached their wagon to digital currencies. The FTX implosion, on the other hand, forced a change. Signature Bank, which is based in New York, has indicated that it wants to drop as much as $10B from its digital-asset customers over the next year.