Crypto companies complain they’re being shunned by most banks

[LUCKMCFLY]

The regulation of some European countries is impressive, if there is no source of funds, they can take it as money laundering, but what can be done if the origin is from cryptocurrency operations? How can I explain that? In those cases, the game starts to get stuck.
It does not have to transfer large amounts of money, and if a large amount is transferred, it will be the bank's objective to block and investigate it.

[kryptqnick]

While top-tier banks are getting more crypto-curious—JPMorgan rolled out a prototype digital coin last month—most see the growing number of companies in the industry as they have since day one, ticking regulatory time bombs.

Unfortunately, as in this example, even those banks that are 'crypto-curious' actually hate real cryptocurrencies and companies and only want to profit from cheap transactions as well as somehow contribute to the death of the free market by trying to offer alternatives for people. JPMorgan's crypto won't be decentralized. Some argue it's not a crypto at all: https://www.ccn.com/why-jp-morgans-bitcoin-killer-isnt-even-a-real-cryptocurrency.

“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.”

I think the banks refuse to help out crypto projects, because they are afraid that the student will overthrow the teacher if you know what I mean. If a crypto project is openly trying to establish connection with banks, chances are it is not against paying taxes and not interested in money laundering, because they would not want to attract attention and control from the banks if they did.

[seoincorporation]

Well, that's because cryptos still a heavy risk business for banks. Just imagine what could happen if HSBC invests $100M and bitcoin price drops to half, that would be a $50million lost for banks .

[figmentofmyass]

And yet they want to use the blockchain to create their own token. 
Isn't that funny?
It could be the reason why they dont want businesses affiliated with crypto currencies to join them or have a loan.

i don't really think it's because crypto is "competition" per se. maybe in a long term, eventual sense, but i think the main issue is that banks see major compliance risks.

agencies like the SEC have come out and said that payments in crypto should be treated (by money transmitters) exactly the same as payments in cash. so all these services, exchanges, brokers, etc that are allowing customers to trade/transfer/leverage and withdraw thousands of dollars a day without KYC are a huge liability risk. in the eyes of many banks, they are straight up violating the bank secrecy act and other strongly enforced laws.

this is how BTC-E got seized and dismantled by the USA government. and believe me, BTC-E's banks regret ever having decided to serve BTC-E's customers.

[xWolfx]

i don't really think it's because crypto is "competition" per se. maybe in a long term, eventual sense, but i think the main issue is that banks see major compliance risks.

agencies like the SEC have come out and said that payments in crypto should be treated (by money transmitters) exactly the same as payments in cash. so all these services, exchanges, brokers, etc that are allowing customers to trade/transfer/leverage and withdraw thousands of dollars a day without KYC are a huge liability risk. in the eyes of many banks, they are straight up violating the bank secrecy act and other strongly enforced laws.

this is how BTC-E got seized and dismantled by the USA government. and believe me, BTC-E's banks regret ever having decided to serve BTC-E's customers.

This is a pretty interesting possibility that is not so obvious to see at all. Since compliance normally runs in the background and nobody except the people working explicitly on it pays attention to it.

So this means that the game is locked for now. But as Bitcoin starts getting more acceptance and implementation by vendors lawmakers could change their point of view and be will probably see a lot more friendly laws towards it in the future.

In conclusion banks could definitely adopt Bitcoin in some years.

[jseverson]

-snip-

it is partly that but also it is about all the illegal activity that took place thanks to altcoins last two years. you see all these ICOs and think they are just scamming a bunch of newbies but many of them were actually laundering money through fake ICO front and cleaned their money by simply running it through that fund raising crap and dumping it on exchanges.

Yeah, I'm sure that's a massive factor. Even without that though, there's this:

Anti-money laundering rules typically require banks to know the identity and aims of their clients and often be able to trace the source of their customers’ cash. Building a compliance and monitoring system is expensive and some banks conclude the costs just aren’t worth it.

People can hate on banks all they want, but the blame isn't squarely on them.

[Kakmakr]

In Australia a few years ago, Banks tried to block exchanges and Bitcoin users from using their Bank accounts for Crypto currency related matters and they were taken to court for anti-competitive behaviour. The plaintive won and they were forced to reverse that decision.

Banks are not above the law and people should stand together to launch group actions against behaviour like that. We should also fund a Crypto currency Bank that deals with Crypto currency clients, to give them some competition. 

[Dudeperfect]

Well, it's not just the bank but we must see the bigger picture behind it. Not every government is willing to distribute the power, especially when it comes to the financial sector. Bitcoin is based on the blockchain technology which relies on the fundamental principle of decentralization, governments are using banks to restrict it as much as possible. However, using Bitcoin are cryptocurrencies is not illegal in most of the countries unless used for illegal activities. There is no practical reason for the banks to restrict the flow of crypto to fiat and vice versa transactions.

[Xising]

...yet for every one of those, there are plenty of others trying to scam the public, launder money or evade taxes.”

It is not surprising that this above is one major reason that icos won't get financial support from banks. Banks are very shrewd business institutions, they wouldn't dive into a business venture they are not sure of recouping their investment. Icos have been bastardized and banks don't see them as a safe place to put money on. Big banks like citi, jpmorgan, hbsc wouldn't at all. They are eagle eyed banks, always looking for where the money at

I agree. I think, despite the fact that it really puts many cryptocurrency companies in a tight spot, you can't really blame banks for doing that because it's just their way of protecting their interests and investments, especially since we all know that their loss would also mean a corresponding loss to their customers who have chosen to put their money in that certain bank. As we all know, cryptocurrency is still not in the widely accepted status that most people would be comfortable to use or to accept, with such establishments including banks. So, I think that's to be expected. I think we can see better acceptance of cryptocurrency once it becomes more stable in value.

[jonathan6655321]

...yet for every one of those, there are plenty of others trying to scam the public, launder money or evade taxes.”

It is not surprising that this above is one major reason that icos won't get financial support from banks. Banks are very shrewd business institutions, they wouldn't dive into a business venture they are not sure of recouping their investment. Icos have been bastardized and banks don't see them as a safe place to put money on.

ICOs are just one aspect of cryptocurrency. And I doubt ICO organizers approach banks or any traditional institution for loans to run their project, as it is too big a risk with hardly any collateral options.

Companies and industries associated with cryptocurrency should not be segregated as far as they are in compliance with all laws.

Deiniftly.
ICOs are on aspect of crypto and the problem is that people like to generalize stuff

[teilwalL05]

...yet for every one of those, there are plenty of others trying to scam the public, launder money or evade taxes.”

It is not surprising that this above is one major reason that icos won't get financial support from banks. Banks are very shrewd business institutions, they wouldn't dive into a business venture they are not sure of recouping their investment. Icos have been bastardized and banks don't see them as a safe place to put money on.

ICOs are just one aspect of cryptocurrency. And I doubt ICO organizers approach banks or any traditional institution for loans to run their project, as it is too big a risk with hardly any collateral options.

Companies and industries associated with cryptocurrency should not be segregated as far as they are in compliance with all laws.

Deiniftly.
ICOs are on aspect of crypto and the problem is that people like to generalize stuff

Well ICO right now really had a negative impression right now because of the low price it had, And projects that don't turn to be successful was the most part why many in the community had doubts on most ICO,

Well fiat currency and Cryptocurrencies was pretty segregated with one another we can not lump each other and bank don't like the volatility that Cryptocurrency have.

[audaciousbeing]

Its really should not come as a surprise to anyone who is conversant with the happenings around the crypto market and the capitalists world that surrounds it. Even though its something that is outrightly wrong because since it cannot be proven that they are engaged in illegal activities, denying them the access to banking operations is mainly allowing them to start to operate in a disadvantage position. My believe is that its not going to last long because the world is changing and the banks needs to be fully integrated in the happenings of the future or else they would be left behind.

[Broly46]

The reputation for crypto has been heavily tarnished by countless ICO scams, I don't think any bank would want to be backing anymore ICO startup, all this companies should try their luck with new capital raising that's not bank sourced.

[markdario112616]

The reputation for crypto has been heavily tarnished by countless ICO scams, I don't think any bank would want to be backing anymore ICO startup, all this companies should try their luck with new capital raising that's not bank sourced.

Neither, ICOs don't have that scam issues. Banks would never invest in a such due to a much deeper reason. Self preservation, when Crypto took over the centralized system of Banks would be literally be altered. Lost investments for them as the decentralized of crypto would be much more in need by those high rank, VIPs and whatsoever you can call to those rich and elites. As they could easily evade tax, much more convenient to them. Then banks would be just a sort of a decoy. This is business and as they see Crypto is a threat and not an investment.

[serjent05]

Banks has always been like this in the beginning, not only to crypto companies but there are lots of applications that they also turn down aside from cryptocurrency and cannabis. No enough assurance for them to get back what they will render will mean no. With the features of cryptocurrency, banks have reasons for not supporting those companies, for them cryptocurrency is an unsure investment and they don't want to take risks.

[angel55]

If everyone joins together and stops using these banks then they will have to change their mind.  We are the customers and we ultimately have the power.  The amount of regulations have gotten ridiculous, you can't even withdraw cash without being drilled with questions.

[Glorious04]

Banks would always require collateral for any loan so I wonder what collateral would crypto companies will offer to get banks support on this matter? Understandably, banks turn down not only crypto companies and cannabis but also those who don't have enough credibility of returning them their money. Banks are suckers and that won't help anyone who would try for their back up without enough and tangible guarantee.

[CaVO32]

Banks would always require collateral for any loan so I wonder what collateral would crypto companies will offer to get banks support on this matter? Understandably, banks turn down not only crypto companies and cannabis but also those who don't have enough credibility of returning them their money. Banks are suckers and that won't help anyone who would try for their back up without enough and tangible guarantee.

exactly. the reason why they are still hesitant up until now towards crypto. the price of crypto is very volatile and considered a very high risk investment. so i doubt they will accept crypto coins as collateral that might lose its value by time instead of gaining its value. banks want assurance and they couldn't see it yet from crypto investments. the ride is one hell of a roller coaster when your investments are in crypto assets. stability is still hard to achieve in crypto. it's understandable that they want tangible proposals rather than a volatile one.