Crypto Banking-Gate Continues Affecting Asset Prices
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| By Marija Matic |
On Friday, Sam introduced you to the drama around the crypto-friendly Silvergate Bank. To bring you up to speed now, Silvergate raised the possibility that it might not survive following the bank run that happened after FTX’s collapse and ongoing regulatory pressures.
In light of this, many big-name crypto clients — including Coinbase (COIN), Crypto.com and Paxos — have terminated their relationship with Silvergate.
Silvergate was one of the most important banks servicing the crypto industry, so the exodus away from it and search for replacement banking options has had a domino effect. Indeed, the market has been red for a few days as a result.
However, those same regulatory concerns extend beyond just Silvergate, making finding and maintaining banking services increasingly difficult. In light of this, many exchanges are looking for banking alternatives.
Perpetuals exchange Bybit responded by announcing a temporary suspension of USD deposits via wire transfer — including SWIFT — due to “service outages” from their endpoint processing partner. However, Bybit has yet to answer whether that partner was Silvergate.
Users can still fund purchases through credit cards and other payment methods, though.
Other exchanges are already looking for new reliable banking partners. Coinbase, for example, has teamed up with Signature bank to process payments.
Meanwhile, some exchanges like Kraken are even planning to open banks by themselves.
It’s good to see these exchanges responding and adapting. However, until the smoke clears and the struggle between crypto-friendly banks and increased regulatory scrutiny is resolved, there may be difficulties to onboard fresh USD, which can influence prices in the short term.
After a sharp drop last week, crypto is showing a mixed performance today with more coins in red than green:
Notable News, Notes & Tweets
- Crypto exchange Kraken announces plans to launch its own bank, despite a challenging regulatory environment.
- A Securities and Exchange Commission official believes Binance.US is operating an unregistered securities exchange in the U.S. This doesn't necessarily reflect the views of the five commissioners at the head of the agency.
- Apple (AAPL) stifles the release of the Uniswap mobile wallet for unknown reasons.
What’s Next
We’re still in uncharted territory as concerns over Silvergate’s ability to continue its operation are proving to be justified, and the hunt for reliable new banking partners continues.
Also, next Tuesday we’ll have the Consumer Price Index release, which will give more macro clarity. For now, the February print of the CPI is expected to be “hot,” or above expectations.
No matter the outcome, a record 67% of Bitcoin’s supply hasn’t moved in at least a year, showing the strongest ever determination of long-term holders to weather the bear market.
Seems we’re not the only ones with a bullish long-term outlook. Hold tight as these developments play out and check in tomorrow for the latest updates.
Best,
Marija
