The crypto industry has faced a number of challenges over the years and these range from regulatory issues to security problems. However, one of the most far-reaching challenges has been the inability of several firms within the industry to receive banking services from registered banking service providers. In India, laws put in place to prevent banks from offering banking services to crypto-related businesses and this practically crippled the industry within the country as many were forced to close up shop or move operations abroad because they could not access the services. Needless to say, banking services are one of the biggest challenges facing the industry.
Despite this, it seems that many crypto businesses are receiving banking services under the table. Recent reports by CipherTrace state that every one of the top 10 major commercial banks in the United States has a number of unregistered crypto service providers who make use of their services for processing their transactions undetected.
According to the rules of the U.S. Bank Secrecy Act and Financial Action Task Force (FATF) funds Travel Rules, banks are required to disclose which of their clients are money services businesses but many of them are unable to identify these businesses and as such, some crypto firms able to fly under the radar.
Also, these laws are due to be revised in the near future and this means that compliance and the identification of these money services businesses will be even more critical and with the complexity of the cryptocurrency industry, this could pose a challenge for banks.
“It would be interesting to know how many financial institutions operating in this space are able to identify a [crypto-business] recipient as a financial institution on the basis of its wallet reference number, or other information that it currently has available to it,” said Carole House of the U.S. Treasury’s Financial Action Task Force during the recent CipherTrace Cryptocurrency Travel Rule Information Sharing Architecture Conference in San Francisco.
These laws could very well mean a more thorough examination of those who make use of banking services on this could lead to a crackdown on crypto-related films who have been able to take advantage of loopholes.