Crypto firms still find it difficult to open a bank account or use bank services. Bloomberg noted this in a recent report.
Banks Uninterested In Working With Crypto Firms
Crypto industry is over ten years, and it has seen extensive growth and adoption in recent time. Despite the level of growth that has trailed the industry, financial institutions are still not interested in working with crypto firms.
Though many crypto enthusiasts believe that the crypto industry will succeed in the traditional financial institution and the fiat system in the future, there is still a wide chasm between the two sectors. The reason for non-accommodative nature of the Bank to crypto firms might probably stem from competition and the biased opinion that it is a tool for illegal activities.
Bloomberg noted in a recent report that Sam Bankman-Fried, CEO of quantitative crypto trading company Alameda Research, complained that “the standard answer of ‘just go to your local Chase branch’ doesn’t work in crypto.” This is because most banks are uninterested in attending to the needs of crypto firms.
A similar stance is prevalent in Malta, despite being a haven for Crypto and blockchain firms. Banks are unwilling to open bank accounts for crypto firms.
Also, Sonny Singh, chief commercial officer of BitPay, a crypto payment processor stated that the firm had been turned down many times by banks. Bloomberg further cites another example of Blockchain investment, trading and advisory firm NKB Group as part of a multitude of crypto firms that find it difficult to establish a banking relationship. Ben Sebley, NKB’s head of brokerage, stated that denying basic banking is madness and it also impedes growth and forces companies to get creative to solve the problem. He further stated that the banks are overly prudent.
Why Banks Are Uninterested
According to Bloomberg, Bankman-Fried noted that it is not illegal for banks to serve crypto businesses, but “it’s a massive compliance headache that they don’t want to put the resources in to solve.”
Meanwhile, the massive compliance which is a headache to the big bank has become a field of exploration for the Small banks. An example of Silvergate Bank in San Diego was cited in the Bloomberg report. The financial institution stated in a November 2018 filing for an initial public offering that crypto businesses have as much as $40 billion to deposit.