Kraken eyes own bank amid regulatory scrutiny
Two major crypto-friendly banks — Silvergate and Signature — have come under increased scrutiny from regulators following FTX's recent collapse.
Crypto exchange Kraken has plans to launch its bank, The Block reported on March 6.
According to the report, the crypto firm continues its plans despite the recent regulatory issues plaguing the industry.
Kraken’s chief legal officer Marco Santori said:
“Kraken Bank is very much on track to launch, very soon. We’re going to have those pens with the little ball chains. We’re going to order thousands of them and attach them to the desks of Wall Street banks everywhere. With our logo.”
Crypto-friendly banks under spotlight
Two major crypto-friendly banks,Silvergate and Signature, have come under increased scrutiny from regulators following FTX’s recent collapse.
Silvergate revealed a $1 billion loss in the last quarter of the previous year, stating that the number could be revised higher. The filing also showed it received a $4.3 billion bailout from the Federal Home Loan Bank.
Meanwhile, there are increased concerns that the bank might suffer a liquidity crunch after the delay in filing its annual returns with the Securities and Exchange Commission (SEC).
Due to this, several Silvergate crypto customers have dropped the bank for its competitor.
On the other hand, Signature is also facing the heat following the FTX collapse. Some crypto exchanges like Binance have been forced to suspend their USD bank transfers due to the fallout.
The bank also revealed its intentions to offload most of its crypto deposits.
Lawmakers target crypto banks
Meanwhile, US lawmakers are working to reduce crypto exposure for traditional financial firms. Senator Elizabeth Warren told the US Treasury Department to use every tool to rein in the crypto market.
The democrat senator from Massachusetts claims that evidence showed that crypto threatens “National Security, Climate, Financial Stability, and Consumer and Investor Protections.”
The Federal Deposit Insurance Corporation (FDIC) recently advised banks on the liquidity risks associated with crypto.
“It is important for banking organizations that use certain sources of funding from crypto–asset–related entities to actively monitor the liquidity risks inherent in such funding sources, and establish and maintain effective risk management practices.”