U.S. Crypto Firms Explore European Banking Partners Amid Financial Crisis

As the financial crisis in the United States continues to impact the cryptocurrency industry, several U.S. crypto firms are exploring partnerships with European banks. This move comes as a way to mitigate risks and ensure stability in the face of economic uncertainty. By partnering with established European banks, U.S. crypto firms can potentially gain access to a broader range of services, such as custody and lending, while also expanding their customer base. This trend highlights the increasing importance of global collaborations in the crypto industry as companies look for ways to navigate challenging economic conditions.

The banking crisis in the United States has resulted in the loss of three crypto-friendly banks, leading to concerns among US-based firms. As a result, crypto firms are exploring the option of diversifying across international jurisdictions, with European banks seeming to be the most viable option in the short term. Switzerland, famous for its banking structure and financial system, is one of the more welcoming countries in Europe for the crypto industry, and US-based firms are trying to open Swiss bank accounts after the collapse of the banking sector. However, bankers said the Swiss firms might not accept them. This has made it difficult for crypto firms to access lenders in the United States.

With the closure of Silvergate Capital and the collapse of crypto exchange FTX in November 2022, pro-crypto banks have taken a significant hit. The recent debacle affected stablecoin reserves and caused further contagion to the financial sector. As U.S. regulators push companies and banking institutions to break partnerships, it may push companies to seek banking partners in Europe, Asia, and the Middle East.

Dubai has been one of the “hot spots” for crypto firms looking for a way out of the crisis in their home country. Given their pro-regulatory efforts and governments’ willingness to welcome the nascent financial sector, Hong Kong and Europe have become more attractive to the industry. Following the closure of Silicon Valley Bank on Friday, the banking crisis has spread offshore, affecting European banks as well.

US banks have reportedly lost about $90 billion in market value on Monday amid growing investor concerns. Meanwhile, the total cryptocurrency market capitalization has surpassed the $1 trillion mark. Although stablecoin reserves have been affected by the financial crisis, the crypto market continues its upward trajectory with sights set on new annual highs.

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