Why crypto companies face rejection from traditional banks
The crypto industry is currently facing a major challenge in securing reliable banking partnerships. Recently, three of the biggest crypto-friendly banks have been forced to close their doors to certain companies, leaving them with limited options.
This development, according to a report by Forkast, has rung the alarm bells among US stakeholders and market watchers.
As this trend continues, digital currency companies may find it increasingly difficult to navigate the financial landscape, hindering their ability to grow and innovate.
Crypto industry suspects coordinated regulatory push to ‘decline’
The crypto industry has been dealing with a major setback of late, as several crypto-friendly banks have stopped offering services to firms in the industry. The move has sparked concern among industry experts and stakeholders, who suspect a coordinated regulatory effort to “decline” the crypto sector.
According to a report, Nic Carter, a general partner at Castle Island Ventures, has dubbed the narrative “Operation Choke Point 2.0”, suggesting that the regulatory actions taken against banks such as Silvergate Bank, Silicon Valley Bank (SVB) and Signature Bank are part of a larger plan to limit banking partnerships in the cryptocurrency industry.
Image: Abra
Regulators’ dislike of crypto
Regulators have often expressed their reservations about the industry, and some see decentralization as a potential threat to the financial system. However, Vadim Yarmak, CEO of blockchain marketing firm PRMR, believes that regulators understand that digital currency is here to stay, and that no amount of strong-arming or opaque legalese can make it go away.
The impact of these regulatory actions is being felt by firms such as Binance, the world’s largest crypto exchange, whose US wing has struggled to find reliable banking partners to act as fiat on-ramps since the closure of Signature Bank, according to The Wall Street Journal. Due to this fight, some USD deposit services have been temporarily suspended.
Total market cap of cryptocurrencies currently at $1.21 trillion on the daily chart at TradingView.com
The digital currency industry is searching for solutions
The recent shutdown of crypto-friendly banking services has left the industry in a precarious situation, with limited opportunities for trusted banking partnerships.
While the sector continues to grow and innovate, the regulatory pressure to “decline” the industry may hinder progress. As a result, many firms in the industry are searching for new solutions to overcome this obstacle.
One possible solution is to promote positive dialogue between regulators and industry stakeholders. By engaging in constructive conversations and demonstrating the value and potential of the digital currency sector, the industry may be able to earn the trust and support of regulators, leading to more favorable regulatory policies.
– Featured image from GoodTherapy
