Months ago I participated at WebSummit as a presenter, where Tim Draper and Joseph Lubin from Ethereum tried to attract attention to this problem, but everybody preferred to stay in love with promising opportunities of ICOs rather than to be focused on such real problems. Even Draper told:
So many millionaires around me [after their successful ICOs], but so often they are not able to pay for their coffee when they are meeting with me.
The ICO/crypto-community isn’t accepted by traditional banks (even by challenger banks, crypto-friendly 8 neobanks or 25 cards). Almost all major banks refuse to accept money after the conversion of the cryptocurrency (I am talking about big transactions – because when you organise your ICO, you need more money to operate your company than ordinary retail client).
Various banks around the world are not too happy about people buying bitcoin. We have seen multiple banks close customer accounts because of this activity.
The money that bank receives after the conversion of the cryptocurrency goes through compliance department where forty-fifty year old “experienced” employees simply do not understand what it is and where it came from. And here is the most stupid thing: if they spend time to sort out the issue, nobody will praise them for that (therefore they lack motivation), but if they make a mistake, they will be fired.
If you convert crypto into fiat and transfer to your bank account less than $50,000, most likely, everything will go smoothly, and you will tell the market that there are no problems and everything works without failures. If you convert from $50,000 to $500,000, the situation is 50/50. But if more than $500,000, you will definitely have to talk to your bank’s compliance. KYC, AML, source of funds … It would even be good that they ask all these questions if they were more tech-savvy (quick and convenient), and if they really wanted to figure it out. But no one wants to sort out your issues; Therefore, you get your “account freeze” and “notification of the need to close within 30 days.”
Are there any “workarounds”?
For sure. In return to one or two pages of questions provide ten to twenty pages of meticulous and detailed answers, thus, “starving the bank out.”
However, you need substantial capital for this purpose as you will have to spend money on your back office (lawyers and accountants) in order to collect and accurately store all papers, electronic statements and screenshots of all transactions on mining, receiving, buying and selling of the cryptocurrency; to be able to quickly reply with exhaustive explanations (with schemes and conclusions) about blockchain, cryptocurrencies and ICO; describe how you and your contractors underwent KYC, AML, source of funds procedures; provide full review and conclusion on your partner exchanges.
You should better hire a large audit company (such as Deloitte or E&Y) $50-100K, which regulatory verifies what kind of business you do, who you cooperate with and how, where your crypto comes from and how you spend fiat money. You will also need to come up with different purposes of payments from your bank because the “receiving bank” will have questions about the origin of funds, and regular similar transactions with the same justifications will raise questions.
Alternatively, you can find some shitty bank in a third world country that will not ask you questions. But in practice the questions will not disappear anywhere and will arise each time you make a payment outside your shitty bank.
Let’s assume you have found a shitty bank that is friendly to this type of operations, or have armed yourself with an army of lawyers/accountants/auditors and defeated your clear and large traditional bank. The problems will still be there. If you make transactions in US dollars (and most transactions are sooner or later transferred to dollars at some stage), then you face the “problem of correspondent banks” in the SWIFT system.
Your bank should have a correspondent bank in the United States, so that its transactions are conducted around the world through such “superfluous intermediaries”. If suddenly your bank “gets on the radar” (will raise questions) of the correspondent bank (and sooner or later, especially with the growth of such transactions, questions arise), then your friendly bank will get to know who it should (not) be friends with.
And this is the point when you need to make your choice whether you want to be as inconspicuous as possible in order not to attract attention, and be constantly hiding and avoiding questions. Or you have legally earned your money and want to build new services and a new economy, and do not want to waste time and resources on any political and bureaucratic nonsense?
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