With the sudden shakeup in banking in the U.S. and the shockwaves sent around the globe, many are questioning their faith in the broader banking system, especially in the wake of this latest scandal. But how that will impact the cryptosphere remains to be seen.
Banks like Silicon Valley Bank and Signature Bank have been crypto-friendly and involved in the industry for some time. These recent banks that collapsed supported bank accounts or other financial products and services for crypto companies; however, their involvement in crypto had nothing to do with their collapse.
It’s coincidental that a lot of VCs in the technology space, many of whom invested in crypto-related companies, among other industry verticals, utilized these banks in particular. Crypto companies that did hold accounts at these banks might suddenly find themselves no longer having a banking relationship, or being proactive, might feel the need to establish new banking partners as the waves of uncertainty roll through markets, regardless of government action (or inaction).
So what do these developments mean for crypto innovators and entrepreneurs at-large?
Well, for starters, a lot of companies might be facing the prospect of having to go through the long, laborious process of onboarding with a new bank once more. With these bank closures, crypto companies have been forced to scramble in search of a new institution to bank with. Unfortunately, as we all know, it’s very difficult to obtain (and maintain) an account with a deposit institution as a crypto company.
And as a crypto company, former account holders at these banks are finding out, they have to essentially start from scratch—which is no easy task. They are faced with establishing new relationships from square one, setting up a new account. This means a long wait time and back-and-forth with bank compliance personnel. Not to mention, these banks will almost certainly have upped their already elevated requirements and expectations as it pertains to the AML Program, compliance infrastructure, and other risk mitigation practices of crypto companies seeking an account.
A new reality…
As a crypto company, the reality of the situation is just setting in. When opening a new account with a deposit bank, they are essentially starting from square one. This includes dealing with a growing wait line, a tedious and long onboarding process, and as a consequence of current events (FTX/SVB), these banks will have super high standards, even more than before.
Overall, this situation may not be optimal, but it serves as a reality check for crypto innovators as they navigate the ever-changing landscape of banking and financial services.
To help crypto companies adapt and thrive in this new environment, BitAML offers specialized services such as updating existing policies and procedures, annual AML training for the entire team, and independent AML reviews. By partnering with experts like BitAML, crypto companies can ensure they are meeting the high standards expected of them and continue to innovate in this exciting and evolving sector.