SI - Some crypto companies said to tap intermediaries for banking access
2023-05-04 13:27:58 ET
A number of digital asset firms have been tapping intermediaries to gain access to banking, as some traditional banks steer clear of crypto-focused clients in the face of heightened regulatory scrutiny as well as regional banking turbulence, the Wall Street Journal reported Thursday.
For example, financial-services firm Prime Trust had started working with crypto exchange Binance.US to store its customers' cash with Prime Trust's network of banking partners, the newspaper said.
Firms like Prime Trust essentially act as an intermediary between their banking partners and clients so that crypto firms can gain access to dollars and other fiat currencies needed to pay employees and fund other expenses.
Binance.US previously used Signature Bank ( OTC:SBNY ) as one of its fiat banking partners, until the regional lender failed in March. Silvergate Capital ( SI ), another crypto-friendly bank, also collapsed two months ago amid the fallout from the failure of crypto exchange FTX ( FTT-USD ) and the Federal Reserve's most aggressive tightening campaign since the 1980s.
In recent weeks, Binance.US has reportedly found a new partner for direct lending.
“There are still a lot of banks willing to bank crypto, but there’s now more concentrated risk,” Oliver von Landsberg-Sadie, CEO of U.K.-based BCG Group, told the WSJ . His company is seeking to add bank partners in the U.S. to help crypto firms in the country gain access to bank accounts.
At the onset of the banking turmoil, the Journal reported that some smaller-sized banks extended welcomes to crypto-focused companies as they scrambled for banking services.
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Some crypto companies said to tap intermediaries for banking access