Crypto Banking Still a Challenge as US Banks Shy Away
• The biggest U.S banks have been mostly unresponsive to crypto customers who recently lost their banking services due to the collapse of Silvergate, Signature and Silicon Valley banks.
• KeyBank, a regional lender based in Ohio, is not taking on crypto clients as they do not meet its “moderate risk profile”.
• Other major U.S banks such as JPMorgan Chase (JPM), Citigroup (C), Bank of New York Mellon (BK) and Morgan Stanley (MS) have either declined to comment or stated that they are not comfortable taking on crypto clients.
No Crypto Banking Port Has Really Opened Up in the US
As Silvergate, Signature and Silicon Valley banks imploded, crypto customers grabbed assets and ran, but those hoping to land at major U.S. banks have been mostly disappointed. Jesse Hamilton explores why this is the case and what this could mean for the future of cryptocurrency banking in the US.
What Happened?
CoinDesk asked the top 20 U.S banks by assets if they were taking on crypto customers, especially those businesses that recently lost their banking homes in the recent carnage. Most of them remained silent on the question with some – including JPMorgan Chase (JPM), Citigroup (C), Bank of New York Mellon (BK) and Morgan Stanley (MS) – declining to comment altogether or stating that they are not comfortable taking on crypto clients. KeyBank (KEY), a regional lender based in Ohio, is between Silicon Valley and Signature in scale but a spokeswoman there said that it is focusing on those that meet its „moderate risk profile“. This means that „crypto-focused firms do not fall within this category at this time.“
Implications for Crypto Companies
The lack of response from major US Banks regarding offering services to crypto companies implies that cryptocurrency businesses will continue to struggle when it comes to traditional banking solutions for now. This could mean decreased access for these businesses when it comes to capital investments or loans which can be critical for growth and development within any business model. Additionally, companies may also face even more stringent regulations than before if any financial institutions decide to work with them as well as higher fees associated with accounts or services offered by smaller financial service providers who specialize in cryptocurrency companies due to their perceived higher risk profiles by traditional lenders.
Potential Solutions
One potential solution could be an increase in non-banking financial service providers such as Coinbase Custody or Fidelity Digital Assets which offer custodial solutions specifically tailored towards cryptocurrency businesses without needing access to traditional banking channels which could provide more options for these companies while they wait for larger financial institutions to come around regarding offering services directly related to cryptocurrencies or blockchain technology products/services more broadly speaking.
Conclusion
It appears clear at this point that most large US Banks remain hesitant when it comes offering services related directly or indirectly with cryptocurrencies meaning that these companies may need alternative solutions until these institutions become more open minded about working with them in some capacity going forward if at all possible given current regulatory environments both domestically as well as internationally across various jurisdictions globally where many of these businesses operate out from currently today!