(Bloomberg) -- About a year-and-a-half after the collapse of crypto-friendly banks in the US, European players are pushing to reinvigorate the market for around-the-clock payments in the digital-asset sector.
A pair of Swiss lenders — AMINA Bank AG and Sygnum Bank AG — have debuted real-time payment and settlement networks in recent weeks.
They are targeting a gap in the market left by the Silvergate Exchange Network (SEN) and Signature Bank’s Signet platform which, prior to their collapse in March 2023, played a crucial role in bringing liquidity to the crypto market. In the quarter before they closed, SEN facilitated $117 billion in US dollar transfers, while Signet processed $275.5 billion, according to company filings.
The shuttering of those networks left Bitcoin liquidity in an even worse state than after the collapse of Sam Bankman-Fried’s crypto empire — at the heart of which sat fraudulent exchange FTX and sister trading firm Alameda Research.
Over a year on, crypto players are still searching for alternatives. The AMINA Payment Network went live in June, followed by Sygnum Connect in July. The products offer a 24/7 network for instant transactions in both fiat currencies and cryptoassets, with no costs for transfers between network members.
The goal is to help crypto outfits “execute trades and settle positions more quickly,” said Kok Kee Chong, chief executive of Singapore-based crypto exchange AsiaNext, which has partnered with Sygnum Connect. “This improves market liquidity, as traders can respond to market movements in real-time without having to wait for settlement.”
Europe and Asia
Plugging the instant payments gap has become a more urgent priority this year due to increased institutional investment in the sector driven by the launch of spot crypto exchange-traded funds in the US, Hong Kong and Australia. Many of the solutions are springing up outside of the US.
Hong Kong-based Marco Lim, managing partner at MaiCapital, said he was running pillar-to-post last year after Signature Bank went down. He now avoids using US-based banks, preferring to work with local players.
The demise of Signature and Silvergate “resulted in a fragmented crypto landscape for a time, with a separation between what was happening in North America versus the rest of the world,” Myles Harrison, chief product officer at AMINA Bank, said in an interview.
AMINA hopes to capitalize. It currently supports instant transactions in Swiss francs, euros, and US dollars but plans to add more fiat currencies soon, including in Singapore and Hong Kong, where the firm has set up subsidiaries, according to Harrison. In time, AMINA’s network will include stablecoins and on-chain settlement, he added.
Uptick in Activity
BCB Group, which operates Blinc, another instant payment network for crypto companies that’s popular in Europe, has seen an uptick in activity on the platform’s Euro and GBP settlement rails since last year.
More recently, the firm launched a US dollar option on Blinc. “We have seen a significant increase in the use of dollar accounts, which the crypto industry has struggled to access,” said Ashley Pope, chief product officer at BCB Group.
Despite such efforts, settlement and clearing continues to be a pain point. The liquidity gap in the crypto market “has still not been closed to the extent that professional market participants would’ve wished for,” Sygnum Bank’s Chief Product Officer Thomas Eichenberger said in an interview, adding that Sygnum’s service mostly targets clients in Europe and Asia.
Crypto outfits see stablecoin regulations under Europe’s Markets in Crypto-Assets or MiCA regime as a potential growth driver for instant settlements.
Sygnum’s Eichenberger said the recent approval of Circle’s popular USDC as a MiCA compliant stablecoin is “a big step.” Sygnum’s Connect network enables users to mint and redeem stablecoins instantly, with support for USDC and MakerDAO’s Dai due to be added soon.
Bringing more tokens into the mix on settlement networks “allows firms that operate solely in crypto, as well as those that have both crypto and fiat capabilities, to seamlessly process payments,” BCB Group’s Pope said.
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