Amid the regulatory pressure, the firms in Blockchain and cryptocurrency industry are still struggling to open bank accounts as not only big banks such as HSBC Holdings Plc and JPMorgan Chase & Co but also the majority of small banks deny to bank the crypto and blockchain companies. It has been a decade now since the launch of Bitcoin & altcoins but it seems like, for many banks across the globe, the cryptocurrencies could not earn the deserved place.
Founder of many digital asset and blockchain startups from New York to Hong Kong say that banking giants have refused to avail the banking services even when some of them attract investment from multibillion-dollar institutions like Singapore’s sovereign wealth fund.
“No bank is willing to help them out,” said Robby Houben, a lawyer, and professor at the University of Antwerp. Courting individuals associated with crypto, he further explained that he had met a number of peers in the crypto industry who don’t deserve such reputation and want the industry to be regulated.
Bloomberg report published on March 3rd also cites the statement of Sam Bankman-Fried, chief executive officer of Alameda Research, a digital-assets trading firm in Berkeley, California. He said that; “The standard answer of `just go to your local Chase branch’ doesn’t work in crypto.’’ In addition to that, he also explains the legality and convenience aspects of serving the crypto firms; “It’s not illegal for big banks to bank the crypto industry, but it’s a massive compliance headache that they don’t want to put the resources in to solve.’’
The situation is even worst for crypto exchanges. Jesse Powell, CEO of crypto exchange Kraken tweeted in January that he had to hire the experts of money laundering to keep the exchange in operation when JPMorgan Chase and Bank of America Corp. closed the Kraken’s payroll account on short notice.
With having a former chairman of the United States Securities and Exchange Commission as an adviser, a crypto payment processor – BitPay has been turned down by many banks, said Sonny Singh — chief commercial officer of BitPay.
On the contrary to the larger banks, the small banks are trying to find the opportunities in this underserved market. During its IPO filing in November last year, San Diego based Silver gate bank said that the crypto firms had as much as $40 Billion to deposit. Other banks which are standing side by side to crypto firms includes Bank Frick in Europe and Signature Bank in the U.S.
“Denying basic banking is madness, impedes sector growth and forces companies to get creative to solve the problem,” Ben Sebley, NKB’s head of brokerage said. “The banks are being overly prudent.”