The recent banking crisis in the US, which led to the loss of three crypto-friendly banks, Silvergate Capital, Silicon Valley Bank, and Signature Bank, has raised concerns among US companies. Amidst wavering crisis alarms, crypto companies seem to be exploring diversification across international jurisdictions.
In the short term, European banks are the right choice for these US companies. While the crisis is still going on, the most viable option is Switzerland, which is famous for its banking structure and financial system.
According to Reuters report, a US-based company is trying to open a Swiss bank account after the reeling collapse of the banking sector. However, bankers say the Swiss company may not accept it. This makes it difficult for crypto companies to access lenders in the United States.
Is Switzerland The Only Option For US Companies?
After the closure of Silvergate Capital, due to the collapse of the crypto exchange FTX in November 2022, pro-crypto banks have been significantly affected. The recent debacle hit stablecoin reserves and caused further contagion to the financial sector.
Caught in the middle of regulation, together with the closure of banks in the United States, may push the company to look for banking partners in Europe, as mentioned, Asia, and the Middle East.
As US regulators push companies and banking institutions to break partnerships, the famous “Crypto Valley” located in Zug, Switzerland, famous for its private banking system, has become one of the more welcoming countries in Europe for the crypto industry.
Yves Longchamp, managing director of crypto-focused SEBA Bank in Switzerland, told Reuters that the bank’s website had experienced a “pronounced uptick” in traffic from the United States.
In addition, at a global conference on Friday, representatives of bank offices in Singapore, Hong Kong, Abu Dhabi, and Switzerland reported increased interest from potential clients involved in the US banking crisis, Yves Longchamp added:
Crypto companies and other money managers have started the onboarding process and many calls are scheduled for next week.
According to the report, the Swiss-based Arab Bank noticed an increase in interest from most US companies or companies involved in crypto venture capital. These companies had been on a mission to open their accounts in the past few weeks before the collapse of Silvergate Capital.
Do Other Jurisdictions Offer Similar Banking Services For Crypto Companies?
As for the possibility of other jurisdictions accepting US companies’ capital, Rani said that he “doesn’t see any bank structure rules” that Signature Bank and Silvergate exist with an internal 24/7 blockchain settlement network.
In the Middle East, Dubai has become one of the “hot spots” for crypto companies looking for a way out of the crisis in their country. Due to pro-regulatory efforts and the government’s willingness to welcome the new financial sector, Hong Kong and Europe are becoming more attractive to the industry.
After the collapse of Silicon Valley Bank there, the banking crisis has spread offshore, affecting European banks as well; Investors dumped European bank shares for the third day in a row.
On the other hand, US banks reportedly lost $90 billion in market value on Monday due to investor concerns. Shares of First Republic Bank fell, as did shares of Western Alliance Bancorp and PacWest Bancorp.
Meanwhile, the total capitalization of the crypto market has surpassed the $1 trillion mark. Although stablecoin reserves have been affected by the financial crisis, the crypto market continues its upward trajectory with its sights set on new annual highs.
Featured images from Unsplash, graphics from TradigView.com