Gemini’s Bold Denial
On March 8, crypto exchange Gemini took to Twitter to clear the air amidst swirling speculation regarding its banking ties with JPMorgan. In a succinct message, Gemini emphasized that “despite reporting to the contrary, Gemini’s banking relationship remains intact with JPMorgan.” It seems they felt the need to push back against unsubstantiated claims, reminding everyone that rumors can spread faster than a meme on the internet.
The Underlying Tensions
These rumors surfaced amid growing unrest in the relationship between the U.S. banking system and the cryptocurrency industry. Following the collapse of the FTX exchange, regulatory pressure has increased, forcing banks to rethink their exposure to this volatile market. Apparently, not all that glitters is crypto gold, and banks are taking notice.
Silvergate Bank: A Cautionary Tale
In a striking example, Silvergate Bank announced on March 3 that it would be discontinuing its digital assets’ payment network citing risk-related concerns. In the wake of a liquidity crisis, they borrowed a staggering $3.6 billion from the U.S. Federal Home Loan Banks System (FHLB). With the rising anxiety about potential bankruptcy, bankers are beginning to act like they read about cryptocurrencies in a thriller novel – gripping, shocking, and not something they want to be part of!
Signature Bank Shifts Gears
Similarly, Signature Bank, which once embraced the crypto market, made waves in December by announcing a reduction in crypto services. They weren’t just trimming the fat; they were shutting down crypto-related accounts and refunding customers. They too borrowed nearly $10 billion from the FHLB to stay afloat, all while the crypto winter starts to feel more like an ice age.
Impact on the Crypto Landscape
The actions of these banks have repercussions across the crypto ecosystem. For instance, in February, leading exchange Binance had to temporarily pause U.S. dollar transactions. Earlier, they noted that their SWIFT transfer partner, Signature Bank, had set a steep minimum requirement of $100,000 for users with U.S. dollar accounts. It seems crypto’s once-prominent ties to traditional banking are fraying, leading to a new era where each dollar is examined like a piece of fine art.
