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Traditional Banks Hate Crypto: Expert Blog

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Digital currency’s total market capitalization is around $500
bln and the total funds raised through ICOs now exceeds $3 bln. However,
the Bubble Generation isn’t
accepted by traditional banks (even by neobanks). Various banks
around the world are not happy about people buying Bitcoin. We
have seen multiple banks close customer accounts because of
this activity.

South Korea banned its traditional banks
from dealing in virtual currencies. The hyper-wired country has
emerged as a hotbed for cryptocurrency trading, accounting for
some 20 percent of global Bitcoin transactions. That’s about 10
times its share of the world economy. Roughly one mln South
Koreans are estimated to own Bitcoins. South Korea’s government
also will ban minors and
foreigners from trading in virtual currency or creating bank
accounts for them in the country.

Banks have “little or no appetite” to get involved with Bitcoin
and cryptocurrencies due to fears of a bubble and illicit
activity associated with it, the chief executive of Credit Suisse
said
. The chief financial officer of ING also weighed in on
cryptocurrency worries, saying that although digital assets are
an effective means of exchange, the bank was not advising
clients to in invest in them. TD Bank is actually trying to block
Bitcoin
purchases as well, although the company is mainly
performing routine checks by the looks of things.

The PNC bank recently threatened one of
their customers for purchasing Bitcoin. Barclays closed down a student’s
account
after his dealings in Bitcoin. British banks
are shunning companies that
handle cryptocurrencies, forcing many to open accounts in
Gibraltar, Poland and Bulgaria. Anson Zeall, the head of
Singapore’s Cryptocurrency and Blockchain Industry Association
or Access, said his organization had heard from 10 companies which had
encountered problems with their banking relationships in
Singapore. Chia Hock Lai, president of the Singapore Fintech
Association, said some of his organization’s members also
experienced account closures.

A few months ago, Visa announced it would suspend
all crypto debit cards outside of the European Economic Area.
It now turns out Mastercard will be doing the exact same thing.
Josh Brown, the chief executive officer of Ritholtz Wealth
Management, bought some crypto. Still, Brown, who helps manage
half a billion dollars, isn’t really a convert quite
yet
.

Let’s call things by their own names – traditional banks hate
crypto. But this hatred is stemming from the lack of
understanding, fear of uncertainty and laziness rather than
anger. Why are banks not willing to understand your issues?
First, they already have a large and understandable business
and they are not interested in a new and small one. Second,
imagine a specialist in compliance. He/she is 40/50 years old,
not highly paid, without any career perspectives.

Their mindset is built on the past (instead of the future) and
their decisions are conditioned on avoiding bad things instead
of growing new ones. They see a lot of transactions daily and
finally they see some odd transaction after the conversion of
crypto, and … they block it. Why? Not because they are bad
people. Simply because they don’t know anything about
Blockchain, cryptocurrencies and ICOs. In their world,
“everything that is odd is forbidden” and if they make a
mistake, they will be fired. Therefore, they send a page or two
of dreary questions, and then simply block the account.

Why can’t the existing 25 crypto-friendly cards and
newborn eight ICO-backed crypto-friendly
neobanks
can’t solve this problem? Since these are
half-hearted solutions (it’s like gluing more and more plasters
on the arm affected by gangrene). You depend on your partner
bank. And if you reach some large amounts within its cash flows
(in fact the business strategy of such partner banks that agree
to such an additional risk is to “drown” your transactions in
their core business so that they are not noticed, and receive
additional income for the risk), the risks that this bank will
be approached by senior bankers (regulators and correspondent
banks) and asked to stop working with you are not eliminated
but simply deferred to a later date. It is the reason why
I am looking for a bank in the
US to buy
– to be focused only on this type of startup and
this type of “source of funds.”

Vladislav Solodkiy

Bio: Vladislav Solodkiy, managing
partner at Life.SREDA, Singapore-based fintech-VC, author
of The First Fintech Bank’s Arrival book.

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Credits : https://cointelegraph.com/news/lights-camera-crypto-advertising-campaigns-for-new-money

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