New banks are expected to compete for business from cryptocurrency companies in the wake of the demise of Silvergate (NYSE:SI) and Signature bank, according to former FTX.US president Brett Harrison.

In an episode of "The Scoop" podcast with The Block, Harrison noted that "previously those banks couldn't really compete with the top two or three — Silvergate and Signature being among them — because they had such a large percentage of the market share."

Following the departure of Silvergate and Signature bank, crypto companies have been scrambling to find new banking partners.

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Institutions like Mercury, Brex, and Customers Bank have emerged as alternatives, while others have looked to non-U.S.-based players like Sygnum and Seba Bank.

Harrison also believes that these recent developments will further fuel the growth of derivatives in the crypto market. "It's already been the case for a long time that the primary source of volume in crypto is in the derivatives, not in the underlying spot," he said.

Looking ahead, Harrison sees the potential for the development of new exchanges that could reduce the need for instantaneous bank rails by implementing delayed settlements similar to those used in the equities market.

"It's not inconceivable that you see a crypto exchange start to do T+1 or T+2," he added.

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