Swiss Banks Aim to Bridge Crypto Payment Gap

Swiss banks Amina Bank and Sygnum are advancing their crypto operations to address the void left in the crypto payments sector following the collapse of crypto-friendly US banks over a year ago. 

This move aims to provide a seamless solution for crypto transactions significantly impacted by the closure of Silvergate Exchange Network (SEN) and Signature Bank’s Signet platform.

Swiss banks step Up Crypto operations

Amina Bank and Sygnum are responding to a crucial need in the crypto market. SEN and Signet were instrumental in providing liquidity, enabling significant transaction volumes before their closure in March of the previous year. SEN had facilitated $117 billion in movements in its final quarter, while Signet had processed $275.5 billion before being taken over by US authorities. 

The downfall of these services, compounded by the collapse of the crypto exchange FTX in 2022, left a substantial gap in liquidity for crypto players. To address this gap, Amina Bank and Sygnum are establishing a 24/7 network for instant transactions involving fiat currencies and crypto assets. 

This initiative aims to offer fee-free transfers between network members, enhancing the efficiency of crypto transactions. According to Kok Kee Chong, CEO of Singapore-based crypto exchange AsiaNext, this development will enable crypto companies to “execute trades and settle positions more quickly.” He emphasized that improved market liquidity allows traders to respond quickly to market movements without waiting for settlements.

Increasing institutional investment drives urgency

The need to fill the instant payments gap has become more pressing due to the surge in institutional investments, highlighted by the launch of exchange-traded funds (ETFs) in regions such as Australia, Hong Kong, and the US. Myles Harrison, chief product officer at Amina Bank, noted that the closure of Silvergate and Signature created a fragmented crypto landscape, especially evident in the disparity between the North and other parts of the world. 

Amina Bank is poised to bridge this gap, offering instant transactions in Swiss francs, euros, and US dollars. The bank plans to expand to more fiat currencies, including those in Hong Kong and Singapore. The bank has also set up subsidiaries in these regions and intends to incorporate stablecoins and on-chain settlements into its network.

OngoingcChallenges in Crypto liquidity

Despite these efforts, liquidity challenges persist in the crypto industry. Thomas Eichenberger, chief product officer at Sygnum Bank, highlighted that settlement and clearing issues continue to pose significant challenges. He noted that the gap has not been closed to the extent desired by professional market participants. 

Meanwhile, BCB Group, which operates the Blinc instant payment network for crypto companies, reported increased activity in Euro and GBP settlements since last year. Amina Bank and Sygnum’s strategic moves reflect the growing demand for efficient and reliable crypto transaction solutions. By addressing the gaps left by previous players and enhancing market liquidity, these banks aim to support the evolving crypto industry needs.

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