Bloomberg Highlights How Cryptocurrency Companies Are Still Struggling to Open Bank Accounts
During the last few years, cryptocurrency and blockchain-related firms have experienced different difficulties to open bank accounts for their financial operations. According to a recent report released by Bloomberg, it seems that companies in the cryptocurrency industry still have trouble opening bank accounts.
According to this report, the CEO of Alameda Research, Sam Bankman-Fried, seems to have troubles to deal with banking institutions. He mentioned that it is not illegal for banks to work with virtual currency businesses. However, banks have a massive compliance headache every single time that there is a company related to virtual currencies that wants to open an account with them. Thus, they do not want to spend their resources on them.
Bloomberg explains that there are several small banks that accept crypto companies in an easier way than larger banks and financial institutions. This could be related due to the number of clients they attract.
One of the companies that have been rejected by banks is BitPay, one of the largest crypto payment processors around the world. The company has been turned away by many banks in different jurisdictions. This firm has as an adviser a former chairman of the U.S. Securities and Exchange Commission (SEC).
Another firm that Bloomberg gives as an example and that struggled to receive services from banks was NKB Group.
On the matter, Ben Sebley, the head of brokerage of the company, explained:
“Denying basic banking is madness, impedes sector growth and forces companies to get creative to solve the problem. […] The banks are being overly prudent.”
It is clear that banks fear to be involved in some problems and issues regarding crypto companies. In the virtual currency space, there have been several firms that launched their products to the market but several of them were simply scams. This happened when the Initial Coin Offering (ICO) market was exploding in 2017 and 2018. A large number of firms were exit scams or fraudulent schemes.
There are some jurisdictions such as Malta or Switzerland that have attracted crypto companies. However, there are some banks that seem to be reluctant to accept crypto-related firms. This is something that will have to change in the future for the industry to keep growing and evolving.