Reasons Why Big Banks are Saying No to Crypto Companies
It is no longer a secret that big crypto companies are being turned away from banking with some high profile banks. The denial of service has affected some companies who are not able to access basic banking services based on technological alignment.
JPMorgan and HSBC are some of the banks that are anti crypto companies banking examples. JPMorgan bank has a soft spot for blockchain and this could be the reason why they are denying the banking services to the “perceived competitors”.
However, the report does not indicate any competition but instead blames lack of crypto regulations. The US, Russia and other larger nations are yet to decide on how to handle the digital money market asset class.
Robby Houben who doubles up as a lawyer and professor at the University of Antwerp says:
“No bank is willing to help them out. I have met some really stand-up people in crypto that don’t deserve such a bad reputation and want the sector to be regulated, yet for every one of those, there are plenty of others trying to scam the public, launder money or evade taxes”.
The crypto Volatility and Risks
The crypto sphere is known to be highly volatile and the risks involved are too many for the banks to cushion at the moment. Additionally, a lot of resources are required to support crypto-based companies. With many crypto platforms and products considered safe, the financial institutions are aware of the positive potential of the digital economy and the underlying technology.
The complexity and uniqueness of each crypto makes it hard to have a standard KYC and AML for all. This is why conforming to these regulations is taking forever since a middle ground has become elusive. On the other hand, the report says banking institutions are not ready to assign resources to come up with a system that is crypto accommodating.
Governments Are in the Stalemate
Many governments across the globe are watching from the sidelines and this has made it hard for crypto to access the traditional banking services. In India for example, banks have been banned from transacting business with exchanges. This has slowed down crypto adoption in the sub-continent.
India is not alone; other countries have introduced their own regulations limiting the rapid growth of the blockchain industry. It appears each country has set restrictions to safeguard their fiat currency uptake as well as makes it easy to tax their citizen.
However, it is not all gloom for the new technology as governments have realized its potential and working on ways to harness the opportunities in the digital asset niche. Several countries including Germany have shown huge interest in the technology while Russia and India are working on customs regulations for their countries.