For US citizens, Silvergate and Signature Bank were two of the last remaining crypto friendly banks, offering services to a range of important crypto companies and exchanges such as Coinbase and Kraken.
However, over the weekend the two banks have been completely shut down, which has caused significant concern for the industry at large.
Silvergate facilitated the important SEN network
One of the most important features of Silvergate was the fact that the bank facilitated the SEN network, which allowed exchanges to trade with far thicker order book liquidity and process more buys and sells.
Moreover, the SEN network allowed for banking services for crypto exchanges 24/7, which is important because crypto isn’t confined to the same working hours that banks are.
This is what worries me,
U.S. crypto firms really only have two banking relationships: SIlvergate & Signature.
SEN Network allows firms to transfer balances between each other.
Banking access and these dollar rails are key for these firms shown below
— Dylan LeClair (@DylanLeClair_) November 18, 2022
With the decline of Silvergate the Signature, and the end of the SEN network, many large exchanges have been searching for alternatives as soon as possible, since they want to continue offering their services to clients around the clock.
BCB is preparing to replace SEN
Now, there is a new contender joining the fray hoping to help these exchanges, in the form of the BCB Group.
The BCB group is a European organisation that hopes to offer the same services that were offered by SEN, and they are working to do so as soon as possible.
This would be crucial in terms of providing more stability for the space, and would help to ensure that the industry can remain as efficient as possible without taking dramatic steps backwards.
More importantly, the fact that a company outside of the US has stepped in to facilitate such a network is indicative of the diminishing influence that the US now has over the crypto markets, thanks to regulators remaining unclear about their position on the industry and hampering innovation rather than facilitating it.
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