Coinbase, the leading US cryptocurrency exchange, has reportedly stopped support for Signature Bank’s Signet payment platform more than a week after New York regulators closed the crypto-friendly bank. According to The Wall Street Journal, Coinbase users will not be able to use Signet to send funds outside of banking hours until further notice. The crypto exchange is said to be looking for another payment network provider while waiting for the outcome of the situation with Signature.
Signature Bank’s Closure
On March 10, New York’s Department of Financial Services (DFS) announced the closure of Signature Bank’s New York branch due to a lack of compliance with anti-money laundering regulations. The DFS alleged that Signature Bank had failed to implement appropriate controls and risk management policies, leading to significant compliance failures. Signature Bank, which is known for being crypto-friendly, was reportedly a preferred banking partner for many cryptocurrency exchanges, including Coinbase.
Impact on Coinbase and Signet
The closure of Signature Bank’s New York branch has had a significant impact on Coinbase, which had been using Signet, Signature Bank’s proprietary blockchain-based payment platform, to send and receive funds outside of banking hours. With Signet’s suspension, Coinbase users will not be able to send funds outside of banking hours until the exchange finds another payment network provider.
According to the Wall Street Journal report, Coinbase is looking for a new payment network provider to ensure that its customers can continue to transact securely and efficiently. The exchange is also reportedly waiting to see how the situation with Signature Bank unfolds before making any decisions about Signet’s long-term future.
The closure of Signature Bank’s New York branch and the suspension of Signet’s support by Coinbase highlight the challenges that crypto businesses face in finding reliable banking partners. Many traditional banks remain skeptical about cryptocurrencies due to regulatory uncertainties and concerns about money laundering and other illegal activities.
However, the growing adoption of cryptocurrencies by individuals and businesses alike is driving demand for more crypto-friendly banking services. As a result, many banks are exploring ways to provide these services while still complying with anti-money laundering regulations and other legal requirements.
In the short term, Coinbase and other crypto businesses will need to find alternative payment network providers to ensure that their customers can continue to transact securely and efficiently. Over the long term, the crypto industry will need to work with regulators and banking partners to establish clear rules and standards for crypto-related activities, allowing for greater collaboration and innovation in the space.
The suspension of support for Signature Bank’s Signet payment platform by Coinbase highlights the challenges that crypto businesses face in finding reliable banking partners. With traditional banks still skeptical about cryptocurrencies, many crypto businesses are forced to rely on specialized banking services or risk being shut out of the financial system. As the adoption of cryptocurrencies continues to grow, it is essential that the industry works with regulators and banking partners to establish clear rules and standards that promote innovation and collaboration while ensuring compliance with legal requirements.