After the bankruptcy filing of the crypto exchange FTX, crypto banks faced significant operational challenges.
In the latest development, Binance's Fiat Partner Silvergate Bank asserted that the bank will only process transactions worth more than $100k.
However, Binance stated that no other banking partners have been impacted.
Signature Bank will no longer be processing transactions of less than $100,000. This move comes as the bank seeks to restrict its exposure to the market for digital assets.
After the FTX collapse, crypto banks faced significant operational challenges. Crypto-focused Silvergate Bank just disclosed a $1 billion net loss. However, Moonstone has announced its exit from the cryptocurrency market.
As regulatory oversight and operational concerns in the space increase, banks are turning away from the crypto space. Binance stated in a statement to Bloomberg:
“Signature Bank has informed us that as of February 1, 2023, it would no longer support any of its crypto exchange customers with purchasing and selling amounts of less than $100k USD.
This is true for all of their crypto exchange clients. As a result, certain individual users may be unable to use SWIFT bank transfers to buy or sell crypto with/for USD for quantities less than $100k USD.”
However, Binance stated that no other banking partners have been impacted. Binance said that there is no reason to be concerned because Signature Bank services 0.01% of our average monthly users. The cryptocurrency exchange also stated that it is actively seeking an alternative solution.
Signature Bank, based in New York, revealed this month that it plans to withdraw over $10 billion in deposits from digital asset clients in December 2022. Despite the FTX crisis, Signature Bank is staying away from the crypto industry.
The Federal Deposit Insurance Corporation (FDIC) of the United States has also issued a warning to financial institutions about their exposure to digital assets. It is apparent that the crypto space's contagion fears are now approaching traditional banking institutions.
Also read: IT Minister Gives a Green Signal to Cryptocurrency in India
