Cryptocurrency companies have widened their search for banking partners after the collapse of two crypto-friendly banks.
Some regional banks in the United States, payment service providers in the United Kingdom, and Swiss and Asian banks are filling the gap left after the collapse of Silvergate Capital and Signature Bank in March, Bloomberg reported Friday (June 9).
In the new banking environment for crypto companies — which is different from the one in which Silvergate and Signature handled most of the industry’s money transactions — the firms are reaching out to a greater number of banks, to banks that are less well known by those in the industry and to more banks outside the U.S., according to the report.
Crypto firms are facing several challenges as they look for banks, including facing greater due diligence from the banks and finding that some financial institutions want to handle some but not all their banking needs, the report said.
At the same time, with crypto firms forming new relationships with a greater number of banks, the industry could end up being more resilient than it was when it was doing most of its business with only two banks, per the report.
Shortly after the downfall of the industry’s two primary banks, some financial institutions welcomed business from the crypto companies.
Despite increased pressure from U.S. regulators, dozens of onshore and offshore banks worked to take advantage of the opportunity, the Wall Street Journal reported March 27.
In another tactic, some cryptocurrency firms are reportedly doing their banking through intermediaries.
The intermediaries store their crypto clients’ cash in their own bank accounts or work with banking partners to arrange accounts in the names of their clients, The Wall Street Journal reported May 4.
They also help their clients arrange to have accounts at multiple banks in case one fails, or one nation’s regulators crack down on the practice, according to the report.
In related news, some banks are looking to limit their dealings with consumers who engage with the crypto industry.
The bank cited “the incidences of scams increasing.”