By George Ward
The crypto asset industry is currently facing another turbulence as the banking crisis in the sector took a hit following the collapse of Silvergate Bank. As a result, several crypto exchanges struggle to maintain their on-ramp fiat to crypto services, with Crypto.com part of the casualties.
Limited Fiat To Crypto Services
The Singapore-based crypto exchange is reportedly only able to offer users Euro-dominated banking services in the European Economic Area (EEA). Crypto.com has previously lost its license to accept USD deposits due to problems its banking partners face.
Moreover, for any crypto trading platform to maintain sufficient fiat off-ramps, it must ensure liquidity and impact the ability of the value of digital assets to rise. Meanwhile, market experts attributed the 10% correction in the price of Bitcoin at the start of 2023 to Binance’s suspension of USD transfers.
On the other hand, if an exchange can only offer its service to only a particular user in a single part of the world and Euros, users will ask questions about its liquidity status. A spokesperson for Crypto.com revealed that the firm’s EUR fiat wallet service provider had lowered EEA residents’ access to the platform through the single Euro payment area (SEPA).
He added that SEPA intends to facilitate domestic borderless transfers between users in the EEA using the EUR deposits and withdrawal features via the service provider.
The Partnership Challenge
Crypto.com’s issue has compounded because of its current relationship with two struggling crypto-friendly banks and the wider crypto market fallout. However, the crypto exchange’s previous banking partner (Transactive Systems) reportedly has licenses in Lithuania and the United Kingdom.
The banking regulator in Lithuania, the Lithuanian Central Bank, doubles as the market supervisor in the country. It directed Crypto.com to halt operations in January due to serious violations of the country’s anti-money laundering regulations.
According to Bloomberg, Transactive created PacNet, a Canadian-based payment solutions firm allegedly accused by the US Department of Justice of aiding transnational criminal organizations’ financial activities. Meanwhile, four executives of Crypto.com have been charged by the United States financial watchdog over their involvement in committing mail fraud and money laundering.
Furthermore, provincial authorities in British Columbia are reportedly attempting to take over $12.31 million worth of properties belonging to executives of Crypto.com through a civil forfeiture lawsuit. The embattled crypto exchange reportedly lost its ability to accept USD fiat deposits after its banking ally, Metropolitan Commercial Bank, announced its exit from the crypto industry in January following a unanimous vote by its Board of Directors.
However, the exchange still allows users to purchase crypto assets with credit cards. In addition, the trading platform also waived fees for new users in their first week in September 2022.
Meanwhile, on-chain data from the blockchain analytic firm Nansen indicates that Crypto.com has a healthy deposits balance of $3.6 billion despite the crisis.