Silvergate, the American bank famed for bridging the gap between the banking system and the crypto world, wound up last week after recording historic losses. Before its collapse, the bank provided several African fintechs with solutions that powered international banking and dollar-denominated remittances. Now, these startups are searching for new partners as their customers remain waiting.
Payday, Grey, and Vella are names from a long list of former Silvergate’s African clientele who are having to secure alternative banking partners. While they are at it, several of their users have taken to social media to complain about having their deposits stuck in these startups
Read also: Fresh off a marketing blitz, Payday is looking to raise funding
Banking takes a pause
For remittance and payments startup, Payday, processing users’ dollar inflow has been a challenge. According to people familiar with the matter, the company is pushing to finalise another partnership that would help it continue to serve its users.
“I have waited for my salary for close to two weeks now. It is simply frustrating. Payday said my Silvergate account is expired, and the salary would be reversed. They also gave me steps to create a new USD account. But none of that is working now—[both] the reversal and the new account. Nothing is working. I am now having to fall back on my savings,” Femi*, a Payday customer, lamented.
On a call with TechCabal, a Payday employee confirmed that the company has severed ties with Silvergate, and is already on its way to resuming its full banking services. “I can confirm to you that Payday has found an alternative to Silvergate. I know some of our competitors that are still trying to land their international banking partners, but we have gone past that stage now,” the employee said.
The story is similar for Grey, a fintech startup that powers international digital banking. According to an email sent to the company’s customers, Grey estimates that it would take up till March 21 before all USD account functionalities are restored for users. Meanwhile, customers’ EUR and GBP accounts remain unaffected.
“We understand how critical we are in supporting your finances and will implement various solutions to ensure that a situation like this does not occur again,” Grey’s CEO, Idorenyin Obong, promised customers in the email.
The silver lining in Silvergate’s shutdown is that the bank ensured that depositors’ funds were fully paid out. This means that affected crypto companies and fintechs in Africa are not witnessing a replay of the FTX saga, which cost startups like Chipper Cash and Nestcoin significant runway funds. The main problem here is a halt in banking services. But, as some of the affected companies have promised, international money services should resume later this month.