Signature Bank Helps Tether Gain Access to US Financial System


Tether Holdings Ltd. has found a way to gain access to the US financial system, with the help of Signature Bank’s Signet payments platform. It wasn’t immediately clear when the platform was put in place, but it was in effect when the regulators seized the bank last month. By sending U.S. dollars to its Bahamas-based banking partner, Capital Union Bank Ltd., clients of Tether were directed to settle their transactions.

The difficulty of accessing a hesitant US banking system is well known, particularly for crypto firms. Therefore, many of them have looked for alternatives among more willing lenders. Tether has never been sanctioned, so doing business with them would not be considered illegal. Yet, banks are expected to know who’s using their products and services, according to Alma Angotti, a former SEC and Treasury Department regulator.

Signature Bank was being investigated by US prosecutors prior to the bank’s seizure. Justice Department investigators in Washington and Manhattan were assessing whether the bank had taken enough measures to detect the possibility of money laundering. However, neither Signature Bank nor its staff have yet to be linked to any wrongdoings.

Since the collapse of Silvergate Capita and Signature Bank, it’s been difficult for crypto companies to send and receive fiat currency. As a result, theBahamas-based stablecoin provider has taken advantage of the situation. Tether has access to numerous banking channels and counterparty, helping them manage the risk of any direct or indirect exposure to Signature Bank.

Tether and Bitfinex had previously tried to open accounts with Signature Bank in 2018, but failed. This year, both companies reached a settlement with the New York Attorney General and were required to stay away from any trading activities with New Yorkers.

Tether has gained a huge following this year as total value for its stablecoins in circulation has increased by 20%. Meanwhile, USD Coin from Circle has decreased by 27%. Tether’s cash reserves are taken care of by Capital Union and another Bahamian lender, Deltec Bank & Trust Ltd. The company’s Treasury-bill holdings are also under watch by Cantor Fitzgerald LP.

Overall, the move to gain access to the US financial system through Signature Bank’s Signet platform has been met with a high risk appetite. Despite potential regulatory sanctions, Tether has managed to position itself as the likely winner in the current US crypto-clampdown.