Cryptocurrency exchange Gemini took to Twitter on March 8 to deny rumors that it was terminating its banking relationship with U.S. financial conglomerate JPMorgan Chase & Co. Gemini said in a short, to the point message that "despite reports to the contrary, Gemini's banking relationship with JPMorgan remains intact."
The comments came in response to a previous report that claimed a banking relationship between the two companies was being terminated, without citing sources. The rumors come amid uncertainty over the future relationship between the U.S. banking system and the crypto industry, as regulatory pressure and market outflows following the dramatic collapse of crypto exchange FTX continue to push banks to reduce their exposure to crypto assets.
A recent example is Silvergate Bank. On March 3, the cryptocurrency bank disclosed plans to terminate its digital asset payments network, claiming that the termination was a “risk-based decision.” Concerns that a liquidity crunch could lead to a bankruptcy filing grew last week after Silvergate delayed filing its annual 10-K financial report.
Silvergate reportedly borrowed $3.6 billion from the Federal Home Loan Banking System (FHLB) to cushion a surge in withdrawals. FHLB, a consortium of 11 regional banks across the U.S., provides capital to other banks and lenders.
Another bank that has stayed away from cryptocurrencies is Signature Bank. In December, it announced plans to reduce crypto services, return funds to customers and close crypto-related accounts. The bank also borrowed nearly $10 billion from the FHLB system in the final quarter of 2022 due to liquidity issues related to the bear market and FTX's bankruptcy.
The bank's move is affecting crypto companies. In February, Binance announced the suspension of USD bank transfers. A few weeks ago, in January, the exchange said its SWIFT transfer partner, Signature Bank, would only process transactions for users with US dollar bank accounts of more than $100,000.
