Cryptocurrency exchange Binance confirmed on Tuesday that it has started running nodes on the Bitcoin Lightning Network while Xapo Bank has also integrated the Bitcoin Lightning Network.
On May 8, the exchange said it was planning a network integration in response to the congestion it was experiencing on the main Bitcoin network.
The Layer 2 network, aimed at reducing costs and increasing transaction throughput on Bitcoin, has been integrated by exchanges Kraken and Bitfinex.
Bitcoin’s Lightning Network can support 1 million transactions per second. The capacity of the network has increased steadily over the past year.
Xapo Bank integrates Bitcoin Lightning Network amid chaos in the crypto banking sector
Coinbase-owned Xapo Bank announced its integration with the Bitcoin Lightning Network on March 2, becoming the first fully licensed bank to integrate with the Lightning Network.
This integration move comes at a time when two leading crypto banks, Silvergate and Signature, are facing trouble with their operations. Considering the current situation in the crypto banking sector, Xapo’s decision to integrate can be seen as a testament to the bank’s bullish sentiment towards the sector.
Xapo integrates Lightning Network
Xapo was founded in 2013 as a wallet and cold storage. In 2021, they became the first company holding BTC to be granted a banking license, thus becoming a bank. Coinbase’s custody arm, Coinbase Custody, purchased Xapo in 2019. At the time, Xapo had approximately $7 billion in custody, making Coinbase Custody the largest cryptocurrency custodian. world.
To kick off the integration, Xapo partnered with Lightspark, a company that provides infrastructure services to companies looking to integrate with the Lightning Network.
The integration allows Xapo Bank users to pay for purchases up to $100 in BTC at any merchant that accepts payments via the Lightning Network. Considering the significant improvements the Lightning Network brings in terms of speed and low costs, Xapo is proud to be the first fully licensed bank to offer near-instant BTC payments.
Chaotic situation in the crypto banking sector
Silvergate and Signature Bank have been in trouble since FTX collapsed and it looks like things are getting worse for them.
On March 8, Silvergate Bank announced that it would cease banking operations according to regulations. Silvergate’s woes became apparent on March 1, when the bank said it would delay filing its annual 10-K report by two weeks. Silvergate shares reacted to this by recording a drop of up to 32% in the following hours.
While announcing the 10-K report delay, the bank also said it was facing questions from regulators about its relationship with failed exchange FTX. Upon hearing this news, several companies working with Silvergate severed ties with the bank. Although Silvergate has outlined a joint recovery plan with the Federal Deposit Insurance Corporation of America, it has decided to suspend operations.
Signature Bank’s problems began in September 2022, months after FTX collapsed. Signature’s mid-Q3 report revealed the bank lost $4.27 billion in cash outflows “due to the recent crypto winter.”
In December, the bank decided to change its outlook and announced it would shrink its crypto-related deposits by $8 to $10 billion. Through it, the bank claims they are “not just a crypto bank” and want to be “clear and transparent.” In January, Signature announced another update to crypto trading and introduced a $100,000 minimum trading limit.
Although Signature was keen to change its outlook, it continued to provide services and serve many related companies during Silvergate’s collapse.