Major crypto exchange Coinbase has dropped Silvergate bank as its partner for USD deposits and withdrawals, per a company memo.
The digital asset platform directed institutional Prime users to update payment instructions to the new banking partner – Signature.
Crypto companies like Kraken and FTX’s LedgerX also switched banking partners recently.
Coinbase will no longer use Silvergate as its partner banking partner for Coinbase Prime, one of the crypto company’s institutional products, per a company memo. Moving forward, the crypto exchange has announced Signature banks as its new banking partner.
In Light of Recent Developments & Out of an Abundance of Caution, We Are No Longer Accepting or Initiating Payments to or From Silvergate.
Also, Prime users were asked to update payment instructions to reflect the changes in USD banking partners. “The need to update your deposit instructions does not impact your ability to trade on Coinbase Prime and does not impact your crypto holdings on the platforms”, the memo told users.
Silvergate Bank stock SI traded 40% down during pre-market hours on Thursday after the news. SI initially dipped roughly 30% after the crypto-focused bank delayed filing its financial report with the U.S. Securities and Exchange Commission.
JP Morgan downgraded Silvergate stock amid doubts about the bank’s financial strength. Questions about Silvergate’s solvency arose following muddy ties with bankrupt crypto exchange FTX and a $1 billion net loss in Q4 2022.
The bank also reported a $14 billion decline in deposits as the bank planned to distance itself from the crypto industry and wind down deposits from digital asset clients. Also, the U.S. Department of Justice started investigating Silvergate concerning its handling of FTX customers.
Coinbase, Crypto Companies Juggle Banks
The news comes amid a raft of changes between crypto companies and their domestic banking partners. Crypto exchange Kraken cut ties with Signature citing the bank’s $100,000 SWIFT transaction limit. It’s unclear which bank Kraken will work with next.
FTX’s LedgerX ditched Silvergate for Signature on Wednesday. The crypto derivatives exchanged told users to use Signature Bank for all domestic USD wire transfers. Binance previously suspended USD transfers after ending dealings with its banking partners.