Stablecoin issuer, Tether, has been revealed to be one of the clients of Signature Bank through whom US customers could transfer funds to the Bahamas, according to a Bloomberg report. This serves as an example of why banks in the US might be wary of getting involved in the cryptocurrency world.

Tether had integrated Signet, a real-time payments platform from Signature Bank, to make transfers from US to the Capital Union Bank in the Bahamas. This process used to take place until March when the Signature Bank was taken over by the regulators. Following this, Tether CTO Paolo Ardoino clarified in a tweeted response that the issuer had ‘no direct or indirect exposure to Signature.’ Moreover, Signet continued to function even after the bank's takeover.

The recent news casts light on the fact that US banks are reluctant to partake in cryptocurrency transactions due to the regulatory uncertainty associated with the asset class. This is probably a concern shared by other banks dealing with cryptocurrencies and considering the mandatory Know Your Customer as well as Anti Money Laundering checks that the banks need to perform, it is difficult to convince regulatory authorities to allow functioning in the industry.

It is, however, possible to consider on-chain alternatives and stablecoin issuers are amongst the most important entities looking to make a change in this dynamic and enable payments in this space. Tether has made it clear that it is exploring other banking arrangements to continue business and keep transactions as legitimate and compliant as possible.

The importance of finding suitable banking partners for stablecoins can not be denied and Tether’s experience might serve as an example for other issuers in this space. Its previous association with Signature Bank, however, might makes it difficult for other US banks to partner with the issuer. Nonetheless, finding viable banking partners for the cryptocurrency world is crucial for its growth and mass adoption.



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