BCB Group, a London-based provider of payment services and business accounts for crypto firms, halted a planned U.S. dollar payments program after regulators shut down Signature Bank earlier today.
Shortly after the suspension of Silvergate Bank’s Silvergate Exchange Network on March 3, BCB Group founder and CEO Oliver von Landsberg-Sadie told CoinDesk that the company would roll out U.S. dollar payments tools to help plug the gap.
Von Landsberg-Sadie told The Block today that BCB Group already had 6 existing clients ready to test that system as part of a limited pilot program, and said the firm executed its first instant U.S. dollar transaction on March 10.
But BCB Group had relied on Signature Bank — which was seized by state regulators on March 12 — to power the program.
BCB Group used Signature Bank for “trade settlement and for U.S. dollar payment accounts,” von Landsberg-Sadie told The Block, meaning those services must now be paused until new partnerships are in place. BCB Group’s payments products in other currencies continue as usual.
“It’s sad to see [Signature Bank] go, but hopefully we can provide continuity for our clients through three new U.S. bank relationships going live soon. We’ll just have to accelerate those, mindful of how sustainable they’ll be under the Fed’s crypto-sceptic views,” von Landsberg-Sadie said.
Banks in turmoil
The interruption comes after a chaotic weekend in the U.S. banking sector that saw regulators step in to close down both Silicon Valley Bank and Signature Bank. The former was first shut down by the California Department of Financial Protection and Innovation, with the Federal Deposit Insurance Corporation appointed as the receiver, on March 10. The New York Department of Financial Services then seized crypto-friendly Signature Bank in order “to protect depositors,” the state banking regulator said in a Sunday night announcement.
In a joint statement after taking over Signature Bank, the Federal Reserve Board, Treasury Department and FDIC said, “All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.”
Some BCB Group customers hold deposits with Signature Bank, von Landsberg-Sadie said, but he added that he has a “reasonable expectation” that they could be paid out as early as tomorrow, thanks to the regulator’s intervention.
As to how likely it is, in the current climate, that BCB Group will locate not one but three new crypto-friendly banking partners in the U.S., von Landsberg-Sadie was optimistic — estimating the partnerships could be live within 4 to 12 weeks.
“As long as they have a solid capital structure, well hedged for interest rate volatility and as long as their AML control are rigorous enough to avoid FTX/Alameda-type entity conflation, they should be OK,” he said. He declined to disclose the names of potential partners.
BCB Group secured what it proclaimed as the UK crypto sector’s largest ever Series A funding round in Jan. 2022, when it netted $60 million from investors including Foundation Capital, PayU and a host of crypto-native investors.
The Block revealed in February that it was raising fresh funds through convertible notes with a pre-money valuation capped at $200 million. The startup’s crypto-focused instant settlement network, BLINC, is effectively a European version of the Silvergate Exchange Network, a tool pioneered by Silvergate Bank — the first of three crypto-friendly U.S. banks to topple last week.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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