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Another US Bank Joins the Small List of Financial Institutions Willing to Serve Cryptocurrency Businesses

Customers Bank, located in West Reading, Pennsylvania, has joined a limited group of FDIC-insured financial institutions ready to deal with cryptocurrency companies in the United States.

The bank will compete with Silvergate in California and Signature in New York in providing crypto businesses with basic accounts as well as a blockchain-based platform that allows customers to transfer money to each other instantaneously 24 hours a day, seven days a week.

Customers Bank's head of digital assets, Cameron Somers, stated, "We are well-positioned to be a fantastic third banking alternative that can provide a solid service to the digital asset sector." “Our primary goal is to create a low-cost deposit franchise comparable to what Signature Bank and Silvergate Bank have accomplished.”

Most US banks have been hesitant to deal with cryptocurrency companies due to onerous anti-money laundering (AML) and know-your-customer (KYC) regulations. However, exchanges and other businesses that service the digital asset market handle large quantities of payments and often seek out several banks to hold and transfer their customers' money.

Customers Bank's vice chair and chief operating officer, Sam Sidhu, stated, "Customers continue to attempt to discover ways to be connected, engaged, and intrigued in the cryptocurrency world." Consumers may be offered incentives or custodial services by certain institutions. We're concentrating on companies that may serve those consumers directly or indirectly.”

Dollars that have been tokenized

In September, ten to fifteen customers will begin testing Customers' blockchain payments platform from Tassat before the bank opens it up to the rest of the crypto community in October.

“Once we have a fully functioning ecosystem with a variety of various kinds of institutions on that platform, the goal would be to grow from there and possibly add some more goods and services to our offering,” Somers said.

By tokenizing U.S. dollar deposits and transferring them across digital wallets on Tassat's platform, the Tassat Pay Network enables real-time blockchain payments. It is conceptually comparable to JPMorgan Chase's JPM coin, which allows corporate clients of the megabank to transfer money to one other instantly through a private blockchain.

Similarly, while Tassat's blockchain is linked to conventional payment systems like the automated clearing house (ACH) and Fedwire, it can only enable payments between customers of the institutions who utilize it.

Customers Bank stated it expects to pay little or no interest on these businesses' deposits since on-chain fiat payments would be free, in contrast to the costs for making payments through ACH. “As a result, they'll be the raw material for our bank to make loans,” Sidhu said.

Non-crypto customers in accounting, alternative energy, commercial real estate, healthcare, hotels, insurance, and manufacturing will also be able to use Tassat Pay, according to Sidhu.

Banking on Main Street

Customers Bank, with $19.6 billion in assets, is 0.52 percent the size of JPMorgan, and regional banks like this are Tassat's sweet spot.

This is Tassat's first collaboration outside of Signature Bank's Signet. According to Tassat CEO Ron Totaro, the fintech firm is wooing banks with balances ranging from $5 billion to $200 billion. (In a similar vein, NYDIG, a digital asset management company, is focusing on payments and banking technology suppliers in order to assist smaller banks compete in the crypto sector.)

Totaro said, “The country's biggest banks are experimenting with blockchain to offer new services and draw deposits and clients, frequently away from small and midsize institutions.” “They have an enormous budget, personnel, and the capacity to experiment that small and medium institutions lack. Small and midsize banks, on the other hand, must show a return on every dollar spent on technology.”

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