Cryptocurrency firms struggle to find banking partners after US bank collapses- Where to next? Singapore? Switzerland? Hong Kong?

Cryptocurrency firms struggle to find banking partners after US bank collapses- Where to next? Singapore? Switzerland? Hong Kong?

Sources suggest that some cryptocurrency companies have turned to Cross River Bank as their preferred banking partner to address this issue

Recently, there have been reports indicating that cryptocurrency companies are facing challenges when finding banking partners. This issue has arisen following the collapse of two prominent US-based banks, namely Signature Bank and Silvergate Capital. As a result, many cryptocurrency firms struggle to secure banking services, causing significant problems for their operations.

Some cryptocurrency companies have turned to Cross River Bank as their preferred banking partner to address this issue. In particular, Circle Internet Financial Ltd. has moved its business to Cross River Bank from Silicon Valley Bank, where it had held $3.3 billion in assets. This move highlights the importance of finding a reliable banking partner for cryptocurrency companies, as they require access to banking services to conduct their business effectively.

The struggle to find banking partners for cryptocurrency companies underscores the challenges that these firms face as they navigate the fast changing landscape of digital currencies. While some banks are starting to embrace cryptocurrencies and offer banking services to these companies, many are still hesitant to do so. As a result, finding a banking partner that is willing to work with cryptocurrency companies is crucial to their success in the long run.

Where are some feasible countries? What are some challenges that we can foresee?

Switzerland

The collapse has forced the crypto industry to seek new banking partners, with some turning to offshore financial companies like Jewel and others looking to transfer their funds overseas. This has led several digital currency companies to turn to Swiss banks, as Switzerland has established a “Crypto Valley” in the region of Zug, which has favourable regulations and a supportive environment for blockchain and cryptocurrency companies.

Swiss banks are known for their confidentiality and discretion, which is important for the privacy-conscious crypto industry. Swiss banking services also offer a range of products and services that can be customised to the specific needs of crypto firms. This can include access to multiple currencies, secure digital storage, and international transactions.

Swiss banks have a strong reputation for stability and reliability, and the Swiss government has a long history of promoting the country as a financial hub. These factors make Switzerland a popular destination for businesses seeking secure and trustworthy banking partners. The combination of favourable regulations, a supportive environment, and a strong reputation for reliability and confidentiality make Swiss banking a good option for crypto firms.

In addition to Switzerland, several other countries are emerging as favourable locations for digital currency firms.

Singapore

One of these countries is Singapore, which has a well-established financial industry and has been actively exploring blockchain technology in various sectors. Singapore’s regulatory framework for digital currencies is relatively open, and the government has been supportive of blockchain-based businesses, making it an attractive destination for digital currency firms.

Singapore has not forbidden cryptocurrency like some other countries have, which has made it a popular location for crypto firms. In addition, the city-state has a robust financial infrastructure, making it an attractive option for banking. Crypto-friendly regulations: Singapore has taken a positive approach to the cryptocurrency industry, with the Monetary Authority of Singapore (MAS) providing clear guidance on the regulatory framework for crypto companies. In addition, the Payment Services Act was passed in 2019 to regulate digital payment tokens, including cryptocurrencies.

Singapore provides various benefits for crypto firms seeking to establish themselves in the region. The country’s banking system is highly developed and stable, with major global banks such as DBS and UOB operating there, providing a sense of security for crypto firms needing a reliable banking partner. Furthermore, Singapore’s strategic location in Southeast Asia grants easy access to major Asian markets, such as China and India, making it ideal for crypto firms looking to expand their business in the region. In addition, Singapore offers favourable tax policies, including a flat corporate tax rate of 17% and various tax exemptions and rebates, which is attractive for crypto firms seeking to reduce their tax burden.

Moreover, Singapore has a well-recognized reputation as an innovation hub focusing on developing cutting-edge technologies. This creates an innovation-friendly environment that can be particularly enticing for crypto firms searching for a supportive environment to grow and innovate. In summary, Singapore’s strong banking system, access to Asian markets, favourable tax policies, and innovation-friendly environment make it an attractive location for crypto firms looking to establish themselves in the region. Singapore’s well-regulated financial system can provide peace of mind for crypto firms looking to establish long-term banking relationships.

Malta

Another country that is gaining popularity among digital currency firms is Malta, which has established itself as a hub for blockchain and cryptocurrency businesses in Europe. Malta has taken proactive steps to attract digital currency firms, such as introducing a regulatory framework for digital currencies and establishing a government agency to oversee the sector. In addition, Malta has a favourable tax regime for blockchain-based businesses, making it a cost-effective location for digital currency firms.

Malta, an EU member state, has made efforts to attract cryptocurrency businesses, making it an attractive banking option for crypto firms. One reason is that Malta has proactively created a regulatory framework for the cryptocurrency industry. The country’s Virtual Financial Assets Act establishes a clear legal framework for cryptocurrency companies operating in Malta. It establishes a regulatory authority, the Malta Digital Innovation Authority, to oversee the industry and ensure compliance. Malta’s banking system is also stable, unlike the US-based Signature Bank and Silvergate Capital, which recently experienced major bank collapses. This stability can reassure crypto firms looking for a reliable banking partner. As an EU member state, Malta provides access to the EU’s single market, which can be beneficial for crypto firms looking to expand their business in Europe.

Malta’s pro-crypto attitude is another reason crypto firms should consider banking in the country. Malta has positioned itself as a “blockchain island” and has actively promoted the development of the cryptocurrency industry, attracting several major crypto companies to set up shop in Malta. Additionally, Malta offers tax benefits for businesses, including a low corporate tax rate of 35% and a refund system for foreign investors, which can provide additional tax benefits for crypto firms.

Other countries that digital currency firms consider include Gibraltar, Estonia, and Bermuda. Gibraltar has been working to establish itself as a “blockchain hub” and has taken steps to create a regulatory framework for the cryptocurrency industry. The country also offers attractive tax benefits. Liechtenstein: Liechtenstein has taken a proactive approach to regulate the cryptocurrency industry and has established a clear legal framework for the sector. The country also offers attractive tax benefits. Bermuda has also introduced a regulatory framework for digital currencies and has been actively exploring the use of blockchain technology in various sectors.

Challenges

While some countries clearly benefit from this saga, some face some challenges. Hong Kong has long been known as a financial hub in Asia, with a reputation for being friendly and open towards new businesses, including those in the cryptocurrency industry. However, recent banking challenges Hong Kong’s crypto firms face after the closure of Silvergate and Signature banks suggest that the city’s banking system may not be as ready as its government is making it out to be.

One of the biggest challenges Hong Kong’s crypto firms faces is the difficulty opening local bank accounts. According to industry insiders, banks in the city are not keen to serve crypto businesses, making it even harder for these firms to access banking services. This is a significant setback for Hong Kong, aiming to become a virtual asset hub. If the city’s banking system cannot support the needs of crypto businesses, it will be difficult for Hong Kong to achieve this goal.

One reason for the reluctance of banks in Hong Kong to serve crypto businesses may be due to regulatory uncertainty. Despite the government’s push to become a hub for virtual assets, there is still a lack of clear regulations in the space. This can make it difficult for banks to assess the risks associated with serving crypto businesses, leading them to err on the side of caution and avoid these clients altogether. This is not only happening in Hong Kong. It’s important to note that Swiss banks are also cautious when dealing with crypto firms, as cryptocurrencies carry risks and potential for money laundering. Due to regulatory pressure, some Swiss banks have already stopped offering services to crypto firms. Taking a careful stand is essential for the banks.

Another issue is the reputational risk associated with serving crypto businesses. While the cryptocurrency industry has come a long way in terms of legitimacy and mainstream acceptance, some still perceive it as a high-risk, unregulated sector. Banks that serve crypto businesses may be seen as supporting this perception, which could damage their reputation and lead to increased scrutiny from regulators.

The challenges Hong Kong’s crypto firms face highlight the need for the city’s banking system to become more accommodating towards the needs of this industry. While the government has made strides in promoting Hong Kong as a virtual asset hub, more must be done to ensure the city’s banking system is ready to support this goal. Clear regulations and guidance from regulators can help to provide banks with the clarity they need to serve crypto businesses. In contrast, education and outreach efforts can help to address the reputational concerns associated with the industry. Until these issues are addressed, Hong Kong’s ambitions of becoming a virtual asset hub may remain out of reach.

I hope this dilemma is short-term. Hong Kong being a financial hub close to China, would be a big plus for the crypto industry. Not only will we see an influx of Chinese tech talents into Hong Kong, but we will also be seeing huge capital inflows too.

Ending remarks

In conclusion, the regulatory landscape for cryptocurrency is constantly evolving and can vary significantly between countries. While some countries embrace cryptocurrencies and develop favourable regulatory frameworks, others remain sceptical and have introduced strict regulations or outright bans on cryptocurrency trading and related activities. As such, it is vital for cryptocurrency firms to carefully consider the regulatory framework and banking system in each country where they operate or plan to expand into. This includes evaluating the legal and tax implications and the risks and benefits associated with banking in each country.

As the recent struggles of cryptocurrency firms to find banking partners illustrate, it is also important to identify reliable banking partners willing to work with the firm and provide necessary banking services. This may involve conducting due diligence on potential banking partners and assessing their ability to meet the unique needs of cryptocurrency firms.

My humble takeaway message to all is this: While the growth potential of the cryptocurrency industry is significant, firms must navigate the regulatory and banking landscape carefully and strategically to ensure their long-term success. Given the uncertainties, it’s worth noting that each country has its own regulatory framework and banking system. Crypto firms should carefully consider the risks and benefits of banking in each country before making a decision.

by Anndy Lian

 

Source: https://www.financialexpress.com/business/blockchain/cryptocurrency-firms-struggle-to-find-banking-partners-after-us-bank-collapses-where-to-next-singapore-switzerland-hong-kong/3028866/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Binance CEO Says Exchange ‘Pulled Back’ Bids on Bankrupt US Firms

Binance CEO Says Exchange ‘Pulled Back’ Bids on Bankrupt US Firms

Major crypto exchange Binance is holding off on any plans to invest in embattled crypto firms in the United States.

In a Feb. 18 tweet, Binance CEO Changpeng Zhao disclosed that the crypto exchange has pulled back on potentially investing in some bankrupt U.S.-based companies, opting to “seek permission first.”

Zhao also responded to blockchain investor Anndy Lian’s advice to “stay clear” of these firms, saying he agreed with the notion.

Binance’s U.S.-based subsidiary Binance US was in talks to acquire bankrupt crypto lender Voyager Digital’s crypto assets. In January, CoinDesk reported that bankruptcy judge Michael Wiles approved initial disclosure statements of the proposed plan.

The approval came after the U.S. Securities and Exchange Commission filed a limited objection to Binance US’s $1.022 billion offer for Voyager’s assets, questioning how the exchange could afford a purchase of this magnitude.

Binance was also allegedly one of the bidders for bankrupt crypto lender Celsius Network’s assets, according to documents leaked by Celsius creditor Tiffany Fong last month. Investment firm NovaWulf was ultimately selected to acquire Celsius’ assets by the firm’s debtors, as per a report last week.

Regulators have turned up the heat on entities like Binance in recent weeks. The crypto exchange’s dollar-pegged stablecoin, issued by Paxos, became the subject of scrutiny after the New York Department of Financial Services ordered the firm to stop minting BUSD. The Wall Street Journal reported that the SEC also hit Paxos with a lawsuit over its BUSD offering.

In light of recent events, many believe that Binance could be turning its attention away from its U.S. business partners entirely. A Feb. 18 report from Bloomberg, citing sources familiar with the matter, stated that the crypto exchange planned to end relationships with U.S.-based intermediaries, and delist all US-based cryptocurrencies. Zhao labelled these claims as “false” in a tweet shortly after, saying “blockchain has no borders.”

 

Source: https://unchainedpodcast.com/binance-ceo-says-exchange-pulled-back-bids-on-bankrupt-us-firms/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Singapore rejects over 100 licensing applications from digital currency firms

Singapore rejects over 100 licensing applications from digital currency firms

Singapore’s central bank is proving to be the toughest regulator in the world for digital currencies to obtain an operating license from. According to a recent report, of the 176 firms that applied for the coveted license, about 100 have seen their applications rejected and only five have obtained the license so far.

Singapore was once seen as a digital currency haven, with many firms setting up local operations or moving their headquarters there. However, the local regulator has become very tough on these firms in the past two years. The Monetary Authority of Singapore (MAS) has shown just how serious it is on ridding the country of unregulated entities after kicking out Binance and its local subsidiary Binance.sg from the country, despite its CEO Changpeng Zhao residing in Singapore.

A report by Japanese financial newspaper Nikkei reveals that the MAS crackdown goes beyond bringing down the world’s largest exchange. The newspaper reports that out of the 176 businesses that applied for a license to offer “digital payment token services,” 103 have either been rejected by the MAS or the applicants have withdrawn their application.

The MAS insists that it’s a supporter of blockchain technology and digital currencies and believes they have a role to play in the future of finance. However, it recognizes the risks they pose and is determined to protect Singaporean investors.

“Cryptocurrencies could be abused for money laundering, terrorism financing or proliferation financing due to the speed and cross-border nature of the transactions,” a spokesperson for the watchdog told Nikkei.

“Digital payment token service providers in Singapore … have to comply with requirements to mitigate such risks, including the need to carry out proper customer due diligence, conduct regular account reviews, and monitor and report suspicious transactions,” the spokesperson added.

At first, the MAS let the virtual asset service providers (VASPs) operate with little oversight. However, it introduced a new licensing regime in January 2020 when the Payment Services Act took effect. Companies that were already operating were allowed to keep on serving their clients by being granted an exemption until the MAS could review their applications. In July 2021, there were 90 companies in this category. A week ago, this number had shrunk to just over 70.

Currently, the MAS has only listed three firms as licensed digital currency entities. These are Independent Reserve, an Australian exchange; FOMO Pay, a digital payments startup; and DBS Vickers Securities, a subsidiary of DBS Group Holdings, Singapore’s largest bank.

Coinhacko and TripleA are the other two that have made announcements claiming to have received the coveted license, although the MAS hasn’t officially recognized them on its website.

Some appreciate the MAS’ strict regulations and requirements for the VASPs. However, there have been many complaints, especially from companies whose license applications have been denied.

Anndy Lian, the chair of Dutch exchange BigONE, is one of those who’ve expressed disgruntlement over the process under which the MAS is handing licenses. He believes that the regulator arbitrarily selects winners and losers in the Singaporean digital currency sector.

“The whole process of selecting who to give the license to is not very transparent. It gives the impression that the government is favoring big players and foreign exchanges,” Lian stated, speaking to Nikkei.

Even those that have obtained this license have some complaints about the MAS. Eric Barbier, the CEO of TripleA, one of the five licensed firms, called out the regulator for its refusal to engage with the industry and tell firms what it requires from them.

“MAS never talks. MAS asks questions and questions and questions. You can ask questions but they will not answer, and most regulators are like this,” said Barbier.

 

 

Original Source: https://coingeek.com/singapore-rejects-over-100-licensing-applications-from-digital-currency-firms/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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