After the closure of Signature Bank earlier today by regulators, BCB Group, a London-based supplier of payment services and business accounts for cryptocurrency enterprises, suspended a planned US dollar payments program.
Oliver von Landsberg-Sadie, the founder and CEO of BCB Group, told CoinDesk shortly after the suspension of Silvergate Bank’s Silvergate Exchange Network on March 3 that the business would introduce U.S. dollar payments tools to fill the void.
In a statement to The Block today, Von Landsberg-Sadie stated that BCB Group already had six existing clients prepared to test that system as part of a small pilot program. She also stated that the company completed its first instant transaction in U.S. dollars on March 10. Yet in order to run the program, BCB Group had to rely on Signature Bank, which state regulators seized on March 12.
According to von Landsberg-Sadie, BCB Group used Signature Bank for “trade settlement and for U.S. dollar payment accounts,” thus such services must now be suspended until other alliances are in place. The payment services offered by BCB Group in other currencies remain unchanged. “It’s unfortunate to see [Signature Bank] go, but we’re hopeful that by establishing three new U.S. bank ties soon, we can continue to serve our clients. The only thing left to do is speed those up, while keeping in mind how sustainable they will be given the Fed’s crypto-skeptic viewpoints, von Landsberg-Sadie added.
The disruption follows a turbulent weekend in the American banking industry, during which regulators intervened to shut down Silicon Valley Bank and Signature Bank. The Federal Deposit Insurance Corporation was designated as the receiver and the former was initially shut down by the California Department of Financial Protection and Innovation on March 10. The crypto-friendly Signature Bank was subsequently seized by the New York Department of Financial Services in an effort “to protect depositors,” according to a statement made by the state banking regulator on Sunday night.
All depositors of this institution will be paid whole, the Federal Reserve Board, Treasury Department, and FDIC declared in a joint statement following the takeover of Signature Bank. No damages will be paid by the taxpayer, as was the case with Silicon Valley Bank’s bankruptcy. Von Landsberg-Sadie stated that certain BCB Group customers had deposits with Signature Bank, but he added that due to the regulator’s action, he has a “reasonable hope” that they could be paid out as soon as tomorrow.
Von Landsberg-Sadie was upbeat when asked how likely it is that BCB Group could find not one, but three new cryptocurrency-friendly banking partners in the U.S. He predicted the relationships may go live in 4 to 12 weeks. They should be fine as long as they have a strong capital structure, are adequately hedged against interest rate volatility, and have rigorous enough AML controls to prevent entity conflation of the FTX/Alameda kind, according to him. He declined to say who the potential partners were.
In January 2022, BCB Group received $60 million from investors including Foundation Capital, PayU, and a number of crypto-native investors in what it claimed to be the largest Series A investment round in the history of the UK crypto industry.
In February, The Block disclosed that it was using convertible notes with a pre-money valuation maximum of $200 million to raise new financing. BLINC, a startup’s cryptocurrency-focused quick settlement network, is essentially a European adaptation of the Silvergate Exchange Network, a platform invented by Silvergate Bank, the first of three crypto-friendly U.S. banks to fail last week. Silvergate Bank was the first of these institutions.