- Following the fall of three crypto-friendly banks, the Digital Currency Group is looking overseas.
- European banks are willing to serve crypto companies suffering through banking failures in the U.S.
- The receptive banks in Europe have said there would be some restrictions.
Crypto businesses reliant on banking infrastructure in the U.S. have been dealt three rapid blows since last week. The collapse of Silvergate, Silicon Valley Bank (SVB), and Signature saw major crypto-friendly banks wiped away, leaving important crypto institutions stranded.
Crypto conglomerate Digital Currency Group (DCG) has been searching for new banking partners and looks to have found options across the pond in Europe. Santander, HSBC, and Deutsche Bank are still willing to connect with crypto firms, CoinDesk reported.
DCG’s efforts to find landing spots for crypto businesses come from banking failures in the U.S. While the closures of the three banks do not look like they will impact depositors at Coinbase and Circle–two companies that used these banks–there will be long-term ramifications.
The Grass is Greener Elsewhere
The sudden reduction in banking partners could push companies away from the U.S., especially as major crypto institutions face harsh regulatory conditions. Ripple CEO Brad Garlinghouse has even announced a crypto exodus offshore is ongoing.
Santander, HSBC, and Deutsche Bank are all European-based banks. Exposure to these banks would allow crypto companies to benefit from new and willing banking partners and allow them to operate in codified legal frameworks.
The landmark EU crypto framework Markets in Crypto Assets (MiCA) is intended to open defined pathways for banks to have exposure to crypto assets. Meanwhile, in the UK, where HSBC is based, regulations are being written to make it a crypto-friendly hub.
However, while the European banking giants are willing to serve crypto companies, they have also stipulated that there would be restrictions. According to a note to the DCG, some financial services would not be available.
For instance, brokerage, money market services, and the ability to wire money to third parties would not be freely available. Additionally, while the banks may be willing to set up accounts for crypto firms, they would place restrictions based on the level of crypto exposure.
The future of crypto banking still needs to be realized as DCG also says it has reached out to BlackRock, JPMorgan, and Bank of America to get a sense of their appetite for banking crypto. They are still waiting to receive a reply.
On the Flipside
- Other U.S. banks, Western Alliance and Bridge Bank, say they are still opening accounts for crypto firms. However, they are facing a significant drop in share price amid the ongoing banking collapse.
- HSBC bought the embattled UK arm of Silicon Valley Bank (SVB UK) for £1 to keep the branch afloat.
Why You Should Care
Crypto businesses in the U.S. face a few factors pushing them away from their current base. Regulations are being chastised by CEOs of Coinbase, Circle, and Ripple, and now these businesses are caught up in a banking collapse without many other U.S. banking options left. On the other hand, European banks are welcoming, and regulations are more clear-cut.
Read more about the impact of bank closures on crypto:
Is Troubled Crypto Bank Silvergate Set to Follow in FTX’s Footsteps?
Read more about how crypto may be left un-banked in the U.S.:
“Crypto Has Been De-Banked:” Impact of Signature, Silvergate, and Silicon Valley Bank Collapse