Deposits from cryptocurrency companies account for almost 16% of the total deposits in Signature Bank. Clients are provided with a payment platform on the Signet blockchain.
Signature Bank reported this week that deposits from members of the cryptocurrency industry rose to $ 10 billion, double that of its California rival Silvergate Bank.
“We’re becoming an important player in the industry,” said Eric Howell, the company’s vice president of business development. “Obviously digital assets and cryptocurrencies are not going anywhere.”
Signature Bank CEO Joseph DePaolo added that the Signet blockchain-based payment platform is the main driver of deposit growth. The arrival of institutional investors leads to the fact that investments “grow by leaps and bounds.” Among the bank’s large clients are Voyager Digital Holdings, Polychain Capital and bitFlyer USA.
According to DePaolo, Signature Bank serves “the five largest cryptocurrency exchanges” and offers retail banking services through them. Silvergate is known to serve Coinbase, Kraken, and Bitstamp. Exchanges often have multiple banking partners to attract new customers faster.
Cryptocurrency firms are often a major source of deposits for the few banks that openly serve the sector. Analysts drew attention to the growth of interest-free deposits in Signature, especially since the bank does not allocate deposits from cryptocurrency clients in its financial statements. In general, interest-free deposits account for about 30% of the total amount of deposits with the bank.
As a reminder, the bank launched Signet, a blockchain platform for instant payments in December 2018. In the spring of 2019, the bank announced that it would offer a full range of banking services to fintech companies in Bermuda, including those that work with cryptocurrencies.