Crypto exchange Gemini took to Twitter on March 8 to deny rumors about terminating its banking relationship with United States financial conglomerate JPMorgan. In a brief and straightforward message, Gemini stated that “despite reporting to the contrary, Gemini’s banking relationship remains intact with JPMorgan.”
The comments came in response to a previous report that claimed without naming a source that the banking ties between the two companies were ending.
Despite reporting to the contrary, Gemini’s banking relationship remains intact with JPMorgan.
— Gemini (@Gemini) March 8, 2023
The rumors surfaced amid uncertainty about the future relationship between the banking system and the crypto industry in the United States, as regulatory pressure and market outflows after the dramatic collapse of crypto exchange FTX keep driving banks to reduce their exposure to cryptocurrency assets.
Among the most recent examples is Silvergate bank. On March 3, the crypto bank disclosed plans to discontinue its digital assets’ payment network, claiming the termination was a “risk-based decision.” Concerns that a liquidity crisis could lead to a bankruptcy filing increased last week after Silvergate postponed filing its annual 10-K financial report.
Related: Banks under pressure from U.S. authorities to cut ties with crypto firms
Silvergate reportedly borrowed $3.6 billion from the U.S. Federal Home Loan Banks System (FHLB) to mitigate a surge in withdrawals. The FHLB is a consortium of 11 regional banks across the United States that provide funds to other banks and lenders.
Another bank making a move away from crypto is Signature Bank. In December 2022, 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 last quarter of 2022 due to liquidity issues related to the bear market and FTX bankruptcy.
Banks’ moves are impacting crypto firms. In February, Binance announced it would temporarily suspend bank transfers of U.S. dollars. A few weeks earlier, in January, the exchange said its SWIFT transfer partner, Signature Bank, would only process trades by users with U.S. dollar bank accounts over $100,000.