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US Cryptocurrency Firms Seek Partners in Switzerland

US Cryptocurrency Firms Seek Partners in Switzerland

The companies of cryptocurrencies US-based companies are trying to open accounts at Swiss banks after the collapse of two cryptocurrency-focused US banks made it difficult for them to use lenders in the country, but the bankers said Swiss companies might not accept them.

The American bank focused on cryptocurrencies Silvergate Capital Corp. It said it planned to shut down last week after it was hit by losses following the dramatic collapse of the FTX cryptocurrency exchange in November last year.

Its closure was followed by bankruptcy on Sunday SignatureBank -considered the main alternative of US crypto companies to Silvergate- in one of the biggest bankruptcies in US banking history.

The global banking sector was rocked by the bankruptcy of Silicon Valley Bank on Friday, which sent global bank shares tumbling on Monday on concerns of further contagion. The technology-focused entity also financed cryptocurrency and was the second-biggest bank failure in the United States.

Crypto analysts said the US bank closures, coupled with moves by regulators at home, would push companies to seek banking partnerships in Europe, Asia and “abroad.”

“US regulators have issued multiple warnings to banks about the potential risks of working with cryptocurrency companies. They have not explicitly prohibited it, but made it clear that this would be frowned upon,” said Ivan Kachkovski, a cryptocurrency and currency analyst at UBS.

“This is likely to push crypto companies to other jurisdictions in search of non-US banks willing to work with the industry.”

Switzerland, long famous for its private banking sector, has also been one of the most welcoming countries in Europe for crypto companies, with the Swiss city of Zug nicknamed “The Crypto Valley.”

Yves Longchamp, managing director of Swiss crypto-focused bank SEBA, said there was a “sharp uptick” in traffic to the bank’s website from the United States, and that in a global call on Friday representatives of the Singapore offices , Hong Kong, Abu Dhabi and Switzerland said they had seen increased interest from potential customers.

“Cryptocurrency firms and other money managers have already started the onboarding process and there are many calls scheduled over the next few weeks,” he said via email.

Switzerland-based Arab Bank said it saw a surge of US companies, mostly crypto funds or involved in crypto venture capital, trying to open accounts in recent weeks as doubts grew about Silvergate. Rani Jabban, head of treasury and financial institutions at Arab Bank, said about 80% of them had been Silvergate clients.

“So far we have received between 10 and 20 inquiries (…) but that does not mean that we can serve and open accounts for all of them,” he said, citing the regulatory difficulties of incorporating US-based clients and estimating that only one or two of them would eventually become clients of Arab Bank.

Cryptocurrency companies relied on Silvergate’s cryptocurrency payments network, the Silvergate Exchange Network, which allowed 24-hour transfers between investors and crypto exchanges, unlike traditional bank transfers, which can often take days to complete. liquidate.

“I don’t see any bank also offering the structure that Signature and Silvergate offered with their 24/7 internal settlement on the blockchain,” said Rani of Arab Bank.

Swiss bank Sygnum, which describes itself on its website as “the world’s first digital asset bank,” maintains its policy of not accepting US clients “due to a lack of regulatory clarity,” it told Reuters by email. Sygnum’s director of marketing, Dominic Castley, emailed.

By Elizabeth Howcroft, from Reuters agency

Source: Ambito

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