Silvergate Bank, a cryptocurrency Bank in the United States reported issues in its payment process system causing more than 200 million wire transfers queued. The bank reported that it’s third-party payment processor Finastra is failing to connect the Bank with the Fedwire Banking Interface.
Bank’s Payment Processor Failure
For some reason, the company handling payment processing for US Bank Silvergate is failing to maintain it’s payment processing system running. Finastra is said to have developed some issues with its payment processing system that connects directly to the US banking network settlement system, Fedwire.
Silvergate said all its incoming transactions are affecting hundreds of millions of transactions remaining in queue. The bank said its outgoing transactions are currently being handled by another third party payment system.
The Bank’s CEO Alan Lane told reporters that the Bank’s trading Partners sent money on Friday but funds are still held up ready for transfer to the OTC desk. The CEO revealed that there might be some opportunities over the weekend to complete the trades held up on the system advising people who sent money not to worry as the system will clear up.
Banking with the Cryptocurrency Industry
According to Silvergate’s business plan, the bank is meant to provide banking services only to cryptocurrency companies. According to the Bank, most cryptocurrency companies struggle to gain access to banking services due to the negative outlook the financial sector holds against cryptocurrency.
According to the Banks annual reports, it serves more than 800 cryptocurrency companies including big names such as Kraken and Gemini. The Bank CEO noticed that the outage didn’t affect it’s SEN platform, the bank’s proprietary network combining cryptocurrency exchanges and investors on one platform.
There are generally very few banks offering services to cryptocurrency exchanges. In 2018 the Indian Reserve Bank banned all commercial banks in the country from dealing with the cryptocurrency industry. Recently coinpedia reported how a successful court case on the side of the Indian cryptocurrency community lifted the Ban.