Bloomberg: Opening Bank Accounts is Still an Issue For Crypto Firms
Bloomberg has reported that cryptocurrency industry still faces considerable trouble in opening banking accounts. To validate its point of view, the business news outlet has highlighted the complaint made by Sam Bankman-Fried, who heads Alameda Research, a quantitative crypto trading company. Bankman-Fried said “the standard answer of ‘just go to your local Chase branch’ doesn’t work in crypto.”
Bankman-Fried has further pointed out that there are presently no rules that limit a bank from serving crypto related companies. However, considering the relatively high level of resources that needs to be set aside to sort complex compliance issues, banks generally avoid dealing with crypto related firms.
Bloomberg, however, points out that the reluctance shown by big banks to serve crypto related firms has become a blessing in disguise for smaller banks. To support the argument, Bloomberg has cited San Diego’s Silvergate Bank as an example. Silvergate, in its November 2018 filing for IPO, has mentioned that crypto businesses are looking to deposit as much as $40 billion, with proper banking support in place.
Even Sonny Singh, chief commercial officer of crypto payment processor BitPay, which has the ex-chairman of the US SEC as the adviser, said the company had faced negative response from many banks in the past.
NKB Group, a blockchain investment, trading and advisory firm, is another company highlighted by Bloomberg as a firm that faced problems in establishing banking relationships. Ben Sebley, NKB’s head of brokerage, said
“Denying basic banking is madness, impedes sector growth and forces companies to get creative to solve the problem […] The banks are being overly prudent.”
Notably, even in Malta, a crypto friendly country, blockchain companies face considerable issues in opening bank accounts. At the end of February Swiss bank Julius Baer disclosed its plans to offer digital asset services to clients, after entering into a partnership with a startup firm named Seba Crypto.