In a move that has disrupted the cryptocurrency industry, Kraken, one of the world’s largest cryptocurrency exchanges, has announced that it will no longer support ACH deposits and withdrawals via Silvergate, citing difficulties with the automated clearing house. According to reports, Kraken sent an email notice to its users on March 22, notifying them that ACH deposits and withdrawals would no longer be available from March 27.
Kraken has assured its users that no other services would be affected by this change, including ACH instant purchases via Online Banking. The exchange has also advised its users to use alternative funding options, such as MVB Bank for Fedwire deposits and withdrawals, and other instant purchase options, to ensure an uninterrupted funding experience.
Kraken has joined the growing list of cryptocurrency exchanges that have halted their ACH deposits and withdrawals via Silvergate. The Winklevoss brothers-founded exchange, Gemini, also stopped accepting customer deposits and processing withdrawals through Silvergate ACH and wire transfers on March 2.
Silvergate is one of the crypto-friendly U.S. banks that collapsed in early March, alongside other lenders like Silicon Valley Bank, posing major challenges for the cryptocurrency industry. Many cryptocurrency firms hold significant exposure to these banks, which has led to disruptions in the cryptocurrency market.
Kraken joined the Silvergate Exchange Network in 2019, which allowed the exchange to offer deposits and withdrawals in U.S. dollars from Silvergate accounts. Kraken has assured its users that its team is working to make ACH funding available again as soon as possible.
Kraken is a cryptocurrency exchange founded in 2011 by Jesse Powell, who is currently the CEO. The exchange is based in San Francisco, California, and is one of the largest cryptocurrency exchanges in the world, trading over $1 billion daily, according to data from CoinGecko.
Silvergate is a U.S.-based bank that is known for its cryptocurrency-friendly policies. The bank is based in La Jolla, California, and was founded in 1988. In 2019, Silvergate launched the Silvergate Exchange Network, which allows cryptocurrency exchanges to offer deposits and withdrawals in U.S. dollars from Silvergate accounts.
Automated clearing house (ACH) is an electronic funds transfer system that allows businesses and consumers to send and receive payments electronically. ACH transfers are commonly used for direct deposit, payroll, and bill payments. ACH transfers are typically slower than wire transfers but are more cost-effective.
The cryptocurrency industry has faced significant challenges in recent years due to the lack of regulatory clarity and the volatile nature of cryptocurrencies. The industry has also faced challenges with banking relationships, as many traditional banks are hesitant to work with cryptocurrency firms due to concerns over money laundering and fraud. As a result, many cryptocurrency firms have turned to banks like Silvergate, which have more favorable policies towards cryptocurrencies.