By Zachary Stone
It’s been over a week since New York regulators shut down Signature Bank, but the effect is still being felt. One of the leading crypto exchanges, Coinbase is currently looking for a new banking partner as a result of the incident.
The shutdown has made it impossible for the exchange to use the bank’s Signet Crypto Payment Network. Coinbase announced Monday 20 March that it is currently searching for a replacement so that it can resume processing of USD withdrawals.
No USD Deposit or Withdrawals
Lots of Coinbase’s customers rely on the Signet real-time payment network to make USD deposits and withdrawals. According to the update from Coinbase, such customers will not be able to withdraw or deposit USD outside banking hours from now, pending when a new payment partner is found.
Crypto withdrawals, deposits and conversions from USDC stablecoin to U.S. dollars can however be done at anytime on the Exchange in spite of the new development. While Signet is still operating, it’s ownership has been transferred to Signature Bridge Bank, an institution run by the Federal Deposit Insurance Corporation (FDIC).
A spokesperson for Coinbase in a statement said this has necessitated the need to find a new partner – “while not ideal, this shows a need for an updated financial system,” he said.
Other Effects of Signature Bank Collapse
Coinbase is just the latest crypto exchange to announce its decision to halt the use of Signature Bank’s services. Shortly after the shutdown, crypto exchange Okcoin announced it was halting its USD deposits since Signature Bank was its main partner for processing USD transactions.
Okcoin customers will also not be able to participate in OTC trading, carry out transactions using credit cards, or trade USD pairs of any kind till further notice.
While New York regulators claim the bank was taken down because the government had concerns on the integrity of its leadership, a board member of the bank has said the motivation was political. Whatever is the case, this shutdwon as well as those of Silvergate and Silicon Vaelley Bank have affected the crypto industry negatively.
In a strange twist, it has also been good for the industry as some experts have attributed the recent crypto rally to such indications of weaknesses in traditional banking.