According to a recent report, the stablecoin issuer Tether has been employing a relatively convoluted scheme to access the US banking system for an undetermined amount of time. Allegedly, Tether’s clients were to use Signature Bank’s Signet Network to transfer money t the Bahamas-based Capital Union Bank to purchase stablecoins using dollars. While it is unknown when the setup was created, it was in place when US authorities closed Signature Bank on March 12th.

Tether Used Signet Network and A Bahaman Bank to Access US Banking System

According to a report from Tuesday, April 4th, the stablecoin issuer Tether has been using Signature Bank’s Signet Network to process its dollar transactions. Allegedly, the company’s clients were instructed to use the network to transfer funds to the Bahamas-based Capital Union Bank to purchase stablecoins.

While it is unknown when Tether started using the Signet Network, the arrangement was active on March 12th when US authorities stepped in and shut Signature Bank down. It is noteworthy that Signature was unwilling to hold the stablecoin issuer’s accounts as Tether attempted to open them in the past without success.

On the day Signature was closed, Paolo Ardoino, Tether’s CEO stated that the company had no exposure to the bank. While the regulators managed to find a buyer for Signature Bank, the fate of the Signet Network remains in the balance. Additionally, the FDIC told the bank’s crypto clients they have until April 5th to close their accounts and withdraw their funds or the process will be completed automatically.

Are US Banks Really Unwilling to Work With Crypto Firms?

The history of cooperation between the US banking system and the cryptocurrency industry has been unsteady at best. So far, most major banks have been cautious with digital assets companies and showed a general preference for not doing business with them. There have, however, been several notable exceptions.

Over the past decade, two fairly large American banks became cryptocurrency companies’ key banking conduits. Unfortunately, both of these banks—Silvergate and Signature—have been closed in March. Silvergate’s downfall, initiated after the bankruptcy of FTX caused a very costly bank run, was particularly dramatic. Furthermore, while the fate of Signet is not yet known, Silvergate’s Exchange Network, a similar piece of key infrastructure for cryptocurrency firms, was terminated even before the bank announced its liquidation.

The recent events caused a great deal of speculation on whether digital asset companies are getting debanked in the US. Despite the fears, however, most major firms have continued operation mostly as normal despite the turmoil. Furthermore, despite watching the industry with a wary eye, several major banks have shown an interest in digital assets with BNY Mellon even calling blockchain technology its “longest-term play”.

This article originally appeared on The Tokenist

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