Swiss Banks Replacing US Banks For Crypto Payments After FTX Collapse

In the aftermath of the collapse of several crypto-friendly banks in the US, Swiss banks are stepping in to fill the void. These banks are now offering innovative solutions for real-time crypto payments. Swiss banking giants, particularly AMINA Bank AG and Sygnum Bank AG, have recently introduced real-time payment and settlement systems.

Swiss Banks Take The Lead In Crypto Payments

These initiatives aim to address the market’s struggles following the failures of the Silvergate Exchange Network (SEN) and Signature Bank’s Signet platform. Before their collapse in March 2023, SEN and Signet played crucial roles in providing liquidity to the crypto market. For context, SEN had processed $117 billion in US dollar transactions. Meanwhile Signet handled $275.5 billion worth of transactions, according to company records.

Hence, their abrupt exit intensified the liquidity crisis already worsened by the downfall of Sam Bankman-Fried’s FTX exchange and Alameda Research. More than a year later, the quest for reliable alternatives has led to the launch of the AMINA Payment Network in June and Sygnum Connect in July.

These networks provide a 24/7 platform for instant transactions involving both fiat currencies and crypto assets, with no transfer fees between network participants. “This improves market liquidity, as traders can respond to market movements in real-time without having to wait for settlement,” noted Kok Kee Chong, CEO of Singapore crypto exchange AsiaNext. This exchange has teamed up with Sygnum Connect to ease crypto payments.

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Impact Of Spot Bitcoin & Ethereum ETFs

The pressing need for instant payment solutions has intensified due to the growing institutional investment in the sector. This has been fueled by the introduction of Spot Bitcoin and Ethereum ETFs in the US, Hong Kong, and Australia. As a result, new solutions are emerging mainly outside the US, with European and Asian markets leading the charge.

Marco Lim, managing partner at Hong Kong’s MaiCapital, expressed satisfaction at finding new partners after Signature Bank’s collapse. “I now avoid using US-based banks, preferring to work with local players,” he said. Hence, AMINA Bank plans to leverage this fragmentation by offering instant transactions in Swiss francs, euros, and US dollars, with intentions to include more fiat currencies in the future.

“In time, AMINA’s network will include stablecoins and on-chain settlement,” said Myles Harrison, AMINA Bank’s Chief Product Officer (CPO). Furthermore, BCB Group, which operates the Blinc network, has seen increased activity in its Euro and GBP settlement services.

Recently, the firm added a US dollar option to Blinc, filling a significant void in the crypto sector. “We have seen a significant increase in the use of dollar accounts, which the crypto industry has struggled to access,” remarked Ashley Pope, CPO at BCB Group, according to a Bloomberg report.

Banks Leverage European Union’s MiCA Regulation

Despite these advancements, the liquidity gap remains a concern. Thomas Eichenberger, CPO at Sygnum Bank, stated that the market liquidity issue “has still not been closed to the extent that professional market participants would’ve wished for.” Thus, Sygnum’s new service primarily focuses on European and Asian clients.

It aims to capitalize on the regulatory framework provided by Europe’s Markets in Crypto-Assets (MiCA) regime to enhance growth in instant crypto payments. The recent recognition of Circle’s USDC as a MiCA-compliant stablecoin is seen as a notable development.

“This is a big step,” Eichenberger said. Sygnum Connect will soon facilitate instant minting and redeeming of USDC and MakerDAO’s DAI. This will enhance the efficiency of payments for businesses dealing in both crypto and fiat currencies.

Additionally, PostFinance, a Swiss government bank, has expanded its cryptocurrency services. On July 3, it introduced trading for Ripple (XRP), Solana (SOL), Cardano (ADA), Avalanche (AVAX), and Polkadot (DOT). In addition, the Swiss bank also offers custody services for these digital assets.

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