Major banking institutions continue to deny basic bank services to cryptocurrency-related businesses, according to a March 3 report from Bloomberg. The article notes that many of the leading banks reportedly view the cryptocurrency industry and crypto-related firms as “ticking regulatory time bombs” and are reluctant to deal with perceived compliance issues.
Bloomberg quoted Alameda Research CEO Sam Bankman-Fried, who said:
“The standard answer of `just go to your local Chase branch’ doesn’t work in crypto. 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.’’
Those reluctant banks include notable names like JPMorgan Chase, HSBC, and Bank of America, which have all reportedly closed crypto customers’ accounts or refused to provide accounts for crypto companies. Meanwhile, the article notes that some smaller institutions have eagerly stepped in to try to fill that service void, with banks like San Diego’s Silvergate Bank, Signature Bank, and Bank Frick openly “courting crypto firms.”
Across the globe, an estimated 1.7 billion adults are considered “unbanked” – which is defined as lacking access to a banking account or some type of mobile money payment system. Many cryptocurrency advocates have cited that phenomenon as a major reason why the new digital currencies and digitized payment systems are needed – to provide access to financial services to the nearly two billion people the banks have failed to serve.
One observer highlighted his own company’s difficulties establishing a working relationship with the banking industry and noted the challenges companies face when banks refuse to provide services. NKB Group brokerage head Ben Sebley 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.”