- Tether Holdings Ltd. and Signature Bank partnered, raising cryptocurrencies transparency worries.
- Tether’s stablecoin was exchanged for dollars wired to Capital Union Bank Ltd.
- The volatility of the cryptocurrency market has scared off traditional banks.
Tether Holdings Ltd. has never had direct access to the U.S. financial system. The firm was able to find a way in for some time by collaborating with Signature Bank.
It has been claimed that the firm directed its cryptocurrency customers to use the Signet transaction platform to wire dollars to Capital Union Bank Ltd. in the Bahamas in exchange for the firm’s stablecoins. Authorities took over Signature Bank in March, although it is unclear when the agreement started.
Even though the partnership between the crypto-friendly bank and the stablecoin is not illegal according to U.S. authorities, their failure to disclose the information has raised concerns. This lack of transparency has led to the collaboration perceived as a questionable player in the United States, indicating potentially risky practices.
Despite the recent developments, Tether’s spokesperson stated that Signature Bank had multiple banking channels and counterparties available to them. The spokesperson also mentioned that the financial giant’s exposure directly or indirectly impacted the parties involved.
March has been particularly gloomy for the cryptocurrency industry in America, with several banks collapsing after revelations about their crypto-friendly policies. However, Paolo Ardoino, Tether’s Chief Technology Officer, holds Twitter to announce that his company not affected by the collapse of these banks.
Crypto Volatility Keeps Mainstream Banks Away
The cryptocurrency market’s volatility has scared off traditional banks, forcing crypto companies to look for other funding sources. The reported March collapses of Signature Bank, and the cryptocurrency-friendly Silvergate Capital Corp. has made it much more difficult for cryptocurrency businesses to get banking services.
Tether, a stablecoin provider based in the offshore financial sector that has never been sanctioned. May do business with financial institutions such as Capital Union Bank. However, financial institutions are responsible for identifying and vetting their clients. And doing business with such companies might need to revise.
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