The island of Malta is deemed to be one of the best countries to open a crypto business. More and more startups and established companies continue to relocate there, including Binance. However, according to the Times Of Malta, dozens of companies who have opened there are “encountering resistance” when they try to open bank accounts.
Banks are apparently “politely declining” crypto businesses, with the excuse that it was outside their “risk appetite”.
Silvio Schembri, Parliamentary Secretary for Financial Services said that he was aware that certain banks were willing to open accounts for blockchain operators but had less appetite for crypto operations.
“The general understanding is that when it comes to crypto operators, banks are waiting for operators to obtain an MFSA (Malta Financial Services Authority) license before opening their doors, which is understandable,” he said. He is holding talks with all parties in order to cultivate a greater awareness. He admits that it is essential that banks make a “clear distinction between blockchain operators and crypto operators”.
Banks Are Being Overly Cautious
It’s not only in Malta where crypto industries are struggling, they are routinely refused banking services by the likes of HSBC Holdings and JPMorgan Chase in cities all across the world.
“The standard answer of `just go to your local Chase branch’ doesn’t work in crypto,’’ said Sam Bankman-Fried, chief executive officer of Alameda Research, a digital-assets trading firm in California. “It’s not illegal for big banks to bank the crypto industry, but it’s a massive compliance headache that they don’t want to put the resources in to solve.’’
London blockchain investment, trading and advisory firm NKB Group have struggled to establish banking relationships. NKB believe that the financial industry needs to embrace and integrate both new technology and the principles of traditional finance. NKB’s head of brokerage, Ben Sebley said the company’s association with cryptocurrencies is often an “insurmountable obstacle, even after months of detailed discussions with potential banking partners”. He added: “Denying basic banking is madness, impedes sector growth and forces companies to get creative to solve the problem.The banks are being overly prudent”.The International Monetary Fund issued the Financial System Stability Assessment Report last week which urged caution with regards to digital investments because of the high risk involved.