Swiss Banks Replacing US Banks For Crypto Payments After FTX Collapse

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As a seasoned financial analyst with extensive experience in the crypto market, I have witnessed the rollercoaster ride of the industry, from its meteoric rise to its crushing lows. The recent collapses of crypto-friendly banks in the US, such as Silvergate Exchange Network (SEN) and Signature Bank’s Signet platform, intensified the liquidity crisis that had already been worsened by other high-profile failures.

Following the demise of several US banks that catered to cryptocurrencies, Swiss financial institutions are making strides to take their place. Notably, they’re introducing advanced solutions for instant crypto transactions. Leading Swiss banks such as AMINA Bank AG and Sygnum Bank AG have recently debuted real-time payment and settlement systems.

Swiss Banks Take The Lead In Crypto Payments

The objectives of these projects are to alleviate the challenges that arose in the market after the demise of Silvergate Exchange Network (SEN) and Signature Bank’s Signet platform in March 2023. Prior to their shutdown, SEN and Signet were pivotal in supplying liquidity to the crypto sector. For clarification, SEN had facilitated $117 billion in US dollar transactions, while Signet managed a staggering $275.5 billion in transactions based on company data.

Their sudden departure exacerbated the existing liquidity crisis, which had been aggravated by the collapse of Sam Bankman-Fried’s FTX exchange and Alameda Research over a year ago. The search for dependable alternatives since then has resulted in the establishment of AMINA Payment Network in June and Sygnum Connect in July.

These networks offer a continuous platform for swift transactions involving both traditional currencies and cryptocurrencies around the clock, without charging transfer fees among participants. By enhancing market liquidity, traders can instantly react to price fluctuations without the need for lengthy settlement processes, according to Kok Kee Chong, CEO of Singapore’s AsiaNext crypto exchange. In collaboration with Sygnum Connect, AsiaNext aims to simplify crypto payment processing.

Impact Of Spot Bitcoin & Ethereum ETFs

The increasing demand for swift payment methods in the instant payment sector has become more urgent as institutional investment in this area expands. This trend has been boosted by the launch of Spot Bitcoin and Ethereum ETFs in countries like the US, Hong Kong, and Australia. Consequently, innovative solutions are arising primarily beyond the US borders, with Europe and Asia spearheading the development.

Marco Lim, the managing partner at MaiCapital in Hong Kong, expressed contentment over forming new partnerships following Signature Bank’s demise. He stated, “I now opt for collaborating with local financial institutions instead of relying on US-based banks.” AMINA Bank intends to capitalize on this market division by facilitating instant transactions in Swiss francs, euros, and US dollars, with potential plans to add more fiat currencies to the list in the future.

Myles Harrison, Chief Product Officer of AMINA Bank, predicted that in due course, AMINA’s system would accommodate stablecoins and facilitate on-chain transactions. Additionally, BCB Group, the organization behind Blinc network, has reported a surge in usage for their Euro and Pound settlement solutions.

In recent developments, BCB Group’s platform Blinc now offers US dollar options, addressing a notable gap within the cryptocurrency market. As reported by Bloomberg, Ashley Pope, Chief Product Officer at BCB Group, stated, “The demand for dollar accounts has grown substantially in the crypto space, and it’s been a challenge for the industry to accommodate this need.”

Banks Leverage European Union’s MiCA Regulation

Although significant progress has been made, the liquidity discrepancy continues to pose a challenge. According to Thomas Eichenberger, CPO of Sygnum Bank, “the market has not yet fully addressed this issue to the satisfaction of experienced market players.” Consequently, Sygnum’s latest offering is geared towards catering to European and Asian clients.

The MiCA regulatory framework in Europe presents an opportunity for significant growth in instant crypto payments, which the industry intends to take advantage of. Notably, Circle’s USDC stablecoin has recently been acknowledged as compliant with MiCA regulations.

As a crypto investor, I’m thrilled to announce that Sygnum Connect is taking a significant stride forward. Soon, we’ll be able to instantly mint and redeem USDC and MakerDAO’s DAI through this platform. This game-changing feature will undoubtedly improve the efficiency of payments for businesses dealing with both crypto and fiat currencies.

Further enhancement, PostFinance – a Swiss state-owned bank – has broadened its cryptocurrency offerings as of July 3. Now supporting trading for Ripple (XRP), Solana (SOL), Cardano (ADA), Avalanche (AVAX), and Polkadot (DOT). Moreover, the bank provides custody solutions for secure storage of these digital assets.

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2024-07-23 16:08