Crypto-friendly banks closure could pose a challenge for crypto companies

The closure of three major crypto-friendly banks in the US, Signature Bank, Silicon Valley Bank, and Silvergate Bank, has sent shockwaves across the digital asset industry. According to some in the crypto community, this could pose a significant challenge for crypto companies in accessing traditional banking partners.

On March 12, the Federal Reserve announced the closure of Signature Bank, citing “systemic risk” as the reason for the bank’s closure. It came only days after the closure of Silicon Valley Bank, which was ordered to shut down on March 10. A week prior, Silvergate Bank, another crypto-friendly bank, announced that it would close its doors and voluntarily liquidate on March 8.

At least two of these banks were seen as important banking pillars for the crypto industry. Signature Bank had $88.6 billion in deposits as of Dec. 31, according to insurance documents. The Silvergate Exchange Network (SEN) and Signature Bank’s “Signet” were real-time payment platforms that allowed commercial crypto clients to make real-time payments in dollars at any time. Their loss could mean that “crypto liquidity could be somewhat impaired,” according to comments from Nic Carter of Castle Island Ventures in a March 12 CNBC report. He said that both Signet and SEN were key for firms to get fiat in but hoped that other banks would step up to fill the void.

Crypto investor Scott Melker, also known as The Wolf Of All Streets, believes that the collapse of the three banks will leave crypto companies “basically” without banking options. “Silvergate, Silicon Valley, and Signature all shuttered. Depositors will be made whole, but there’s basically nobody left to bank crypto companies in the US,” he said.

Meltem Demirors, chief strategy officer of digital asset manager Coinshares, shared similar concerns on Twitter, highlighting that in just one week, “crypto in America has been unbanked.” She noted that SEN and Signet “are the most challenging to replace.”

However, some in the industry believe that the closure of the three firms will create room for another bank to step up and fill the vacuum. Jake Chervinsky, head of policy at crypto policy promoter the Blockchain Association, said the closure of the banks would create a “huge gap” in the market for crypto-friendly banking. “There are many banks that can seize this opportunity without taking on the same risks as these three. The question is if banking regulators will try to stand in the way,” he added.

Meanwhile, others have suggested that there are already viable alternatives out there. Mike Bucella, General Partner at BlockTower Capital, told CNBC many in the industry are already changing to Mercury Bank and Axos Bank. “Near-term, crypto banking in North America is a tough place,” he said. “However, there is a long tail of challenger banks that may take up that slack.”

Ryan Selkis, CEO of blockchain research firm Messari, noted that the incidents have seen “Crypto’s banking rails” shuttered in less than a week, with a warning of the future for USDC. “Next up, USDC. The message from DC is clear: crypto is not welcome here,” he said. “The entire industry should be fighting like hell to protect and promote USDC from here on out. It’s the last stand for crypto in the US,” Selkis added.

USDC, which is the second-largest stablecoin by market capitalization, has been hit hard by the recent bank closures. Circle, the issuer of USDC, confirmed on March 10 that wires initiated to move its balances at Silicon Valley Bank had not yet been processed, leaving $3.3 billion of its $40 billion USDC reserves at SV. The news prompted USDC to waver against its peg, dropping below 90 cents at times on major exchanges.

However, as of March 13, USDC was climbing back to its $1 peg following confirmation from CEO Jeremy Allaire that its reserves are safe and the firm has new banking partners lined up. Despite the recent challenges, many in the crypto community believe that stablecoins like USDC will play a vital role in the future of digital assets.

The closure of these crypto-friendly banks has raised concerns among regulators, who fear that it could lead to a loss of confidence in the banking system. Some experts believe that regulators may step in to prevent other banks from taking on the risks associated with serving crypto companies.

However, others argue that regulators should not stand in the way of innovation and that banks should be allowed to serve the needs of the crypto industry. They believe that crypto companies should be treated like any other legitimate business and that they should have access to banking services.

The recent bank closures also highlight the need for crypto companies to have robust risk management strategies in place. As the industry continues to grow, it will face increasing regulatory scrutiny, and companies will need to be prepared to navigate these challenges.

In conclusion, the closure of three major crypto-friendly banks in the US has raised concerns about the future of digital assets in the country. While some in the industry believe that it could create room for another bank to step up and fill the vacuum, others are concerned that it may leave crypto companies without banking options. The recent challenges faced by stablecoins like USDC also highlight the need for robust risk management strategies in the digital asset industry. Despite the challenges, many in the crypto community remain optimistic about the future of digital assets and believe that they will play a vital role in the global economy.


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Cryptocurrency Community Debates Fallout from Closure of Major American Banks

The closure of three major American banks that serve cryptocurrency firms has sent shockwaves through the broader cryptocurrency community. Silicon Valley Bank (SVB), which has traditionally served startups across several innovation sector industries, was shuttered by California’s Department of Financial Protection and Innovation on March 10, while Signature Bank met a similar fate on March 12. The closures have sparked a debate within the cryptocurrency community about the risks of traditional finance institutions that serve fiat currency deposits, withdrawals, and monetary flows.

The reasons surrounding the closures are still coming to light, but they have caused particular concern within the cryptocurrency community due to their exposure to stablecoins. USD Coin (USDC) issuer Circle, for instance, had over $3.3 billion of its $40 billion reserves locked up in SVB, which caused major uncertainty around the effect Circle’s exposure would have on its ability to manage redemptions. As a result, the USDC stablecoin briefly lost its $1 peg. However, USDC has seen its peg creep back up to the $1 mark after Circle CEO Jeremy Allaire announced that the stablecoin issuer has lined up new banking partners in the United States.

The closure of the banks has also led the cryptocurrency ecosystem to take a closer look at neobank services that could potentially bypass or serve to bridge gaps exposed in the latest mainstream banking failure. Coinbase CEO Brian Armstrong took to Twitter on March 13 to discuss the need for more innovative solutions in the cryptocurrency industry. According to Armstrong, Coinbase has previously considered features that could potentially address the risks associated with traditional finance institutions.

One of the biggest risks associated with traditional finance institutions for cryptocurrency firms is the risk of bank runs. This was a major concern for Signature Bank, which was taken over by the New York Department of Financial Services to prevent further bank runs as customers scrambled to pull funds from SVB and Signature. As a result, there is a growing demand within the cryptocurrency community for neobank services that can offer stability and security.

One potential solution that has been proposed is for cryptocurrency firms to create their own neobank services. This would allow them to bypass the risks associated with traditional finance institutions altogether and create a more secure and stable financial ecosystem for the cryptocurrency industry. However, creating a neobank from scratch is not without its challenges, particularly in terms of regulatory compliance and capital requirements.

Another potential solution is to partner with existing neobank services that have already established themselves as trustworthy and reliable institutions. This would allow cryptocurrency firms to benefit from the stability and security offered by neobank services without having to build their own from scratch. However, this approach would still require regulatory compliance and would require cryptocurrency firms to give up some control over their financial ecosystem.

Regardless of the approach taken, it is clear that the closure of major American banks that serve cryptocurrency firms has exposed significant risks associated with traditional finance institutions. As a result, the cryptocurrency ecosystem is now exploring new ways to create a more stable and secure financial ecosystem that can support the growing demand for cryptocurrencies and stablecoins. Whether through the creation of new neobank services or through partnerships with existing institutions, the cryptocurrency industry is working to build a financial ecosystem that can weather the challenges of the traditional financial sector.

In addition to neobank services, the cryptocurrency industry is also exploring other innovative solutions to address the risks associated with traditional finance institutions. For example, decentralized finance (DeFi) platforms have emerged as a potential alternative to traditional banking services. DeFi platforms operate on blockchain technology and allow users to access financial services without relying on intermediaries like banks. By eliminating intermediaries, DeFi platforms can reduce the risks associated with traditional banking and offer greater transparency and security to users.

However, DeFi platforms are still in their early stages of development and are not yet able to offer the same level of stability and security as traditional banking services. Furthermore, they are currently facing significant regulatory challenges, particularly in the United States, where regulatory authorities are grappling with how to regulate DeFi platforms.

Despite these challenges, the growth of the cryptocurrency industry shows no signs of slowing down. In fact, many experts predict that cryptocurrencies and stablecoins will become increasingly important in the global financial system in the years to come. As a result, it is becoming increasingly important for the cryptocurrency industry to develop a stable and secure financial ecosystem that can support the growing demand for these new financial instruments.

In conclusion, the closure of three major American banks that serve cryptocurrency firms has sparked a debate within the cryptocurrency community about the risks of traditional finance institutions. As a result, the industry is now exploring new ways to create a more stable and secure financial ecosystem that can support the growing demand for cryptocurrencies and stablecoins. Whether through the creation of new neobank services, partnerships with existing institutions, or the development of DeFi platforms, the cryptocurrency industry is working to build a financial ecosystem that can weather the challenges of the traditional financial sector.


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Privacy blockchain platform Aztec to shut down Aztec Connect

Privacy blockchain platform Aztec has announced that it will be shutting down Aztec Connect, the network’s privacy infrastructure that acts as the encryption layer for Ethereum. The network was launched in July 2022 and has since amassed more than 100,000 users. However, the company has now officially announced that it will be closing down the service.

The closure of Aztec Connect will involve disabling deposits from front-ends like and on March 17. Users will be able to withdraw their funds from Aztec Connect with no fees for one year, but withdrawals will become significantly more burdensome after March 21, 2024, according to a blog post by Aztec. The company has recommended that users withdraw their funds as soon as possible.

From March 2024, Aztec will no longer run a sequencer, meaning the current system will no longer publish rollup blocks processing Aztec Connect transactions. “Contract permissions will be renounced, and all rollup functionality will be ceased,” the announcement reads. However, Aztec has fully open-sourced the entire Aztec Connect protocol, and it encourages the Aztec community to fork, deploy, and operate a new version of the system. “We’d love to see an independently-operated Aztec Connect and are ready to fund it,” Aztec said.

According to the announcement, the shutdown of Aztec Connect marks a milestone in the development of a decentralized general-use encrypted blockchain. Before launching Aztec Connect in July 2022, Aztec first experimented with using a zk-Rollup with Aztec 1, which was “slow, inefficient, costly” and limited in functionality to “basic private transfers.”

Aztec’s focus on privacy has been a significant factor in its popularity among blockchain users. Its privacy infrastructure is designed to help users protect their financial data and transaction history from third-party entities, thereby maintaining their privacy. The company has been developing privacy-oriented solutions to improve the efficiency and security of blockchain-based financial transactions.

The closure of Aztec Connect is a significant move for the blockchain platform, but it remains to be seen how the Aztec community will react to the news. As the company has encouraged the community to fork, deploy, and operate a new version of the system, it is possible that a new, independently-operated version of Aztec Connect may emerge in the future. However, for now, users of the platform will need to withdraw their funds before the closure of the service on March 21, 2024.


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Portuguese Crypto Exchanges Hit with Bank Account Closures

Crypto users in Portugal are facing new uncertainty after some major banks are closing down accounts involved with cryptocurrency trading.

This is a huge blow considering that Portugal is one of Europe’s most crypto-friendly jurisdictions.

Bloomberg media reported the matter on Wednesday after contacting some of the crypto market players in the region.

Last week, Banco Comercial Português, one of the largest private banks in the country, and Banco Santander, a global bank whose subsidiary branch runs in Portugal, closed bank accounts associated CriptoLoja, a Portuguese cryptocurrency exchange based in Lisbon.

Pedro Borges, CriptoLoja’s co-founder and chief executive, revealed the matter to Bloomberg media.

Borges further disclosed the shutdown after two smaller banks closed accounts associated with some countries’ crypto firms.

Another crypto agency called ‘Thoughts the Coin’ also has been unable to open an account for months after its bank accounts had been closed one year ago. Pedro Guimaraes, the crypto exchange founder, narrated the matter to Bloomberg.

Besides that, Chief Product Officer Ricardo Filipe stated that Luso Digital Assets, a crypto trading platform in Portugal, also had some of its bank accounts closed in the last twelve months.

Furthermore, more than two crypto exchanges in the country had also been hit by the menace in the last twelve months, as per the report.

In an email statement, Banco Comercial Português, the above-stated bank, clarified that it is its responsibility to inform relevant authorities every time it sees “suspicious transactions” and terminate accounts associated with such activities.

Meanwhile, A Banco Santander consultant also pointed out the bank acts in “accordance with its perception of risk”.

However, Pedro Borges, CryptoLaja CEO, told Bloomberg that they have always informed authorities about cases of any suspicious transactions.

“We now have to rely on using accounts outside Portugal to run the exchange. All the compliance and reporting procedures have been followed,” Borges said.

The fresh move by the Portuguese banks has impacted the operations of crypto exchanges in Portugal, which already have the central bank license.

Pedro Guimaraes, founder of Mind the Coin, also stated: “While there is no official explanation, some banks just tell us they don’t want to work with crypto companies. It’s almost impossible to start a crypto business in Portugal right now.”

Crypto-friendly Climate Changing

Portugal is one of the most crypto-friendly countries in the world. Lisbon hosted an Ethereum conference in October of 2021. The country has been is one of the most Bitcoin-friendly countries in Europe.

Portugal recently got wide attention with its tax-free cryptocurrency regulations and many incentives that benefit crypto dealers and miners in the crypto-friendly region. And that attracted international entrepreneurs, investors, and digital nomads to migrate to the country to trade cryptocurrencies without paying taxes.

The Central Bank of Portugal, Banco de Portugal, has issued licenses for crypto agencies, including Criptoloja and Mind The Coin, allowing them to operate as crypto exchanges.

However, the recent move by Portuguese banks could signal a shift and toughen of the environment in Portugal’s crypto sector. Portugal’s government announced plans to tax crypto income in May.

Image source: Shutterstock


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Elon Musk Tweets About Bitcoin: A Closure To Another Tweet From January?

Bitcoin has become a part of the mainstream media. While it might have been odd to tweet and discuss bitcoin a few years back, throughout the past few months, we saw a growing number of some of the most influential figures and companies talk about it.

Elon Musk is a veteran Bitcoin commentator, and he’s also known to comment on some other cryptocurrencies, though it’s been a while since he last tweeted something about BTC.

Today, at the peak of a calm weekend, Musk tweeted the following:

Immediately after his tweet, bitcoin’s price spiked almost $200 to $23,800, which was the former all-time high set on Thursday.

Twenty minutes later, and Musk tweeted a reply to his original tweet, stating that he was “Just kidding, who needs a safe word anyway!?”

In January, Bitcoin Wasn’t His Safe Word

Musk’s tweets are known for their vagueness, whether he tweets about TSLA shares too expensive, Dogecoin, or SpaceX.

However, the current tweet is somehow related to his previous one when he was also speaking of the primary cryptocurrency.

Ten days into the current year of 2020, Musk tweeted that “Bitcoin is not my safe word.” If you had noticed the date today, it is precisely ten days before the end of 2020. Back in January, bitcoin was trading roughly around $8,000. As of writing his second tweet, bitcoin is trading at $23,800, a day after setting its all-time high level of $24,200.

As always, his tweet leaves about 40 million Twitter followers asking questions, and it’s undoubtedly a win for Bitcoin to be in front of such a huge audience once again.

It’s also interesting to see where the prices will take from here and if the cryptocurrency will go through another impressive leg up.

Featured image courtesy of US-News


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