Kraken’s Non-Corporate Clients Will No Longer Be Able to Use Signature Bank
According to a Wednesday report, the cryptocurrency exchange Kraken notified its non-corporate clients they wouldn’t be able to make deposits and withdrawals using Signature Bank. The bank announced it would be limiting its exposure to digital assets already in December, and warned Binance it would no longer be processing transactions worth less than $100,000 in late January.
Kraken to End Transactions With Signature Banks for Non-Corporate Clients
A report from Wednesday indicated that the cryptocurrency exchange Kraken informed its clients they would no longer be able to make deposits and withdrawals using Signature Bank. The deposits will cease being available on March 15th, and withdrawals two weeks later on March 30th. According to the exchange, the decision was made due to certain changes made by the bank—possibly referring to a recent decision to downscale Signature’s digital asset operations.
Late last year, Signature Bank signaled its desire to limit its exposure to cryptocurrencies. Earlier this year, in late January, the bank acted on the intent and notified Binance, the world’s largest cryptocurrency exchange, it would no longer handle users’ transactions worth less than $100,000.
Late on February 28th, LegerX, one of the solvent entities of the collapsed FTX Group, told its clients to send funds to Signature Bank, rather than the beleaguered Silvergate. At the time, Signature refused to make comments on specific clients but reiterated that it is still in the business of holding digital assets deposits, despite its actions to downscale.
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Banks With Crypto Exposure Under Increasing Pressure
The collapse of FTX last year in November seemingly caused many banks with connections to cryptocurrencies to reconsider their involvement. Silvergate in particular, a major banking partner of the collapsed cryptocurrency exchange, found itself under great pressure in the wake of FTX’s bankruptcy.
Its shares represent one of the few major cryptocurrency-related stocks that have dropped significantly since the start of the year—with Coinbase and MicroStrategy, for example, being 92% and 78% in the green YTD—and the bank went through a bank run worth over $8 billion around the New Year.
By mid-February, the bank’s stock became the most shorted in the US due to its troubles. Furthermore, Silvergate also became the target of a DoJ probe into its connections with FTX and its former CEO Sam Bankman-Fried. The banks were given additional cause to reconsider their digital asset connections this year as well.
February saw a renewed offensive against various parts of the cryptocurrency sector by both federal and state regulators. On February 9th, the SEC announced a settlement with Kraken according to which the exchange would discontinue its staking service and pay $30 million in penalties. Around the same time, Coinbase’s CEO Brian Armstrong hinted that the Commission may be moving to ban staking in the US altogether.
On February 13th, the stablecoin issuer Paxos revealed both that it was ordered to stop minting BUSD by New York regulators, and that it had received a Wells notice from the SEC pertaining to the Binance-branded token. It is, however, important to note than not all banks are looking to abandon digital assets or downscale their involvement with cryptocurrencies. BNY Mellon, for example, reiterated that it considers crypto assets an integral part of its long-term strategy and called them its “longest-term play”.
Do you think Signature bank is moving toward abandoning digital assets altogether? Let us know in the comments below.