If you’re a crypto startup dealing with stubborn institutions, you’re not alone!
Ask any crypto startup and they’ll tell you - It’s really difficult to open a bank account.
From New York to Hong Kong, crypto firms around the globe are facing the same issue. Let’s take a look at Germany where the introduction of a Crypto Custody License to provide custodial services has attracted interest from more than 40 crypto firms and startups. While the Crypto Custody License appears to be a welcome move towards more regulation in the crypto-asset space and further cements Germany’s position as one of Europe’s leading blockchain and crypto hubs, the biggest hurdle many crypto startups are facing is having access to basic banking services such as opening bank accounts.
This anti-crypto sentiment of traditional banking institutions has seen many startups complete the frustrating process of jumping from one banking institution to another, only to have their application rejected by each consecutive compliance department.
Crypto Storage AG, a Switzerland based subsidiary of Crypto Finance AG, opened a Frankfurt branch so it could apply for the new crypto custody license but was rejected by no less than 15 banks before finally finding a provider and being approved for a bank account.
This is an all too familiar struggle for crypto startups.
To frustrate the issue even further is that there is no legal reason for banks to refuse to open accounts for crypto firms. While banks may spout fraud and anti-money laundering issues, it appears that a large part of the reluctance may stem from a clear lack of understanding of crypto-based businesses and a refusal to adapt or accept the digital currency technology.
There’s no doubt that stringent ‘Know Your Customer’ compliance and monitoring processes are critical. Digital currencies have long been plagued by their association with illicit activities since they first appeared on the scene a decade ago. However, despite the digital asset industry growing exponentially in use, technology, and legitimacy in recent years, traditional banks have largely maintained a blanket ban of crypto. A position that has been criticized for slowing the growth in the sector.