what's the problem with crypto business

[void]

I'm not professionally active in crypto-related business.
I'd like to understand the background of those tens (maybe hundreds) of post asking "what's the crypto friendly jurisdiction or bank".
Can anybody explain what's behind all this madness? Why is it so difficult to trade crypto in your name or as a company?
Is it forbidden in some jurisdictions? Is it complicated because of regulatory blockers? Are the banks scared for some reason? Do they just want to avoid paying taxes from their profit?
Sorry for a general questions but I don't know how to ask a better way.

 

[Martin Everson]

Boils down to one thing >>>>>> High risk of money laundering

Banks are scared stiff of potential money laundering and terrorist financing and 99.9% of banks want nothing to do with crypto for this reason. Banks are trying their hardest to get rid of cash transactions and exert their dominance in controlling the flow of money and the last thing they want is digital cash.

 

[void]

ok, but fear is one thing and greed/business is another - doesn't it automatically mean there will be a good number of banks/EMIs trying to use this idiotic stance of their competitors and building their business around this?

 

[Martin Everson]

There is opportunity but all banks globally look to the US for guidance in this regards. When we start to see Citibank, Wells Fargo etc welcome crypto business then the other banks around the world will follow immediately - no one wants to be first. It was very similar to when sanctions were lifted on Iran no European banks wanted to be first to start accepting Iranian clients again and it was proved right as sanctions have gone back on.

At present it is really only some Eastern European banks and EMI's that are seizing on this opportunity. In Lithuania for example an EMI's can get direct access to SEPA network. They can in effect offer clients crypto banking in EUR and don't have any worries of violating a partners (correspondence bank) policy by accepting crypto. The banks in Eastern Europe are also more accepting of crypto.

I just don't think any traditional big bank will step forward and seize on the opportunity to handle crypto business or build a business around it. You are most likely going to see specialist challenger banks setup exclusively to cater to crypto business.

 

[John Spectre]

Crypto like a cash nowadays.
You could use it, it seems to be legit, but right after you show some serious sum, other people (and banks too) start to see on you like on a criminal, despite the fact how you earn your crypto. So, in most places of world you can't do big purchases or do big bank deposit with cash, the same with crypto - having big crypto portfolio have problems with spending.

Actual madness is come from big bull run on the crypto at last year. A lot of random or casual people who own some crypto many years before, or just trade with fast growing price became millionaires in a couple of months. Without good knowledge of how to carry with big money, those people trying to do generic way: right like they receive couple of bucks present or got salary - tries to bring money to bank.
For sure it's a absolutely abnormal situation for financial market and banks just denied this thing.
Bank don't know how to prove legality of the crypto assets and crypto owners don't know how to explain it to banks.
Trading crypto on your name or your company's name actually didn't solve problem, because it answer on question 'who bring money', but don't answer on question 'source of initial money'. And here we come to first sentence - crypto like a cash. Banks don't want to track blockchain explorers, wallets, etc(the same as it possible to track cash actually). Simplest way - denied operation.

And this situation, it's just confirmation of thing, that crypto is not the place for money laundering, crime, etc.
People who act on crime side don't have any problem with withdraw crypto, as same with banks operation or cash manipulation. They are just have experience how to avoid laws and rules to cover their crime doings on real fiat market and they do same on crypto market. Crypto don't do it simpler or harder.

 

[KJK]

Bank don't know how to prove legality of the crypto assets and crypto owners don't know how to explain it to banks.
Trading crypto on your name or your company's name actually didn't solve problem, because it answer on question 'who bring money', but don't answer on question 'source of initial money'. And here we come to first sentence - crypto like a cash.

I feel like Alice in Wonderland. If I just traded on one exchange and held crypto there, then THEORETICALLY there is a chance of proving that. What if someone traded on multiple exchanges, some unregulated, some hacked, some went bancrupt, then that person exchanges some Bitcoin into Monero which is untraceable, then he sold some to his friends, some to a random dude, then he found some forgotten wallet from years ago...

What kind of nonsense is "source of initial money"? What is my initial money? That does not make sense at all. Where exactly does the bank think you can make a line between "initial" money and "non-initial" money?
Perhaps pocket money that my mum gave me when I was a teenager is initial money; or money from my first job; or money that I deposited to an exchange years ago is initial money? If someone traded during the last years, deposited some, withdrew some, you cannot say what is initial money.

I imagine walking into a car store and buying a car above some cash limit. Then the salesman would demand to prove the history of each banknote from the moment it was printed in a central bank. That makes about the same sense as asking for "source of funds" in crypto. If I were a terrorist, the last thing I'd do is depositing money from a crypto exchange to a bank.

 

[Martin Everson]

Unfortunately that is the reality and it is not going to change any time soon :-(

 

[John Spectre]

KJK,
You could say it for any manager in any bank who work on checking money source.
If you will found bank that allow this story and could take this money - tell us the name of bank, many of us will be happy to move money there.
I totally agree with you here. 'Due deligence' process in the banks it's a stupidness paranoia that absolutelly nothing about laundering and terrorism, but how Martin Everson said it's a reality and we need to follow those rules.

 

[void]

Sad topic... and it gets even worse. Say you pass due diligence process and get your money to the bank account (no matter if those are crypto profits, lottery winnings, gains from selling your house or company) - every time you move bigger sum to another account in another bank (even your own) you are very likely to be asked again about "the original" source of it. This happened to me a few times with transactions as low as equivalent of 20k eur.
Technically speaking you are supposed to reveal everything to every part of the chain until it's transformed to something considered a "new gain". Strange times we live in.

 

[Martin Everson]

That's banking today, you are guilty until proven innocent. Banks will always treat new and existing customers as criminals because they can.

I am still waiting for a US bank CEO to whisper in Trumps ear that crypto is bad for them - just like steel and mining executives did. Then Trump will just issue an executive order banning banks having any crypto dealings. The knock on effect will cause banks globally to dump crypto clients if those banks still wish to have access to USD correspondence banks in US :-(

It sounds far fetched but so did pulling out of NATFA, pulling out of Paris climate agreement, withdrawing from UN human rights council, imposing tariffs on allies and now creating a damn space army..lol.

Bottom line is banks are not going to support anything that could replace them.

 

[JohnSeed]

Everything seems to be a problem with crypto today. The good days we saw last year is gone - and I think they wont come back again. Of course you can find some banks which is friendly to crypto but the question is for how long, and things are going to change all the time - just like the crypto courses.

 

[Martin Everson]

Of course you can find some banks which is friendly to crypto but the question is for how long,

You hit the nail on the head. When things like the below happen on a regular basis you got to be worried.

UK Banks Target Cryptocurrency Owners: Assets Frozen and Locked Their Accounts - CoinDais Crypto News

Now with a new international group setup called the J5 to tackle the crime question in crypto those wild swings in price via insider manipulation etc may fade away.

International Tax Authorities Form J5 To Fight Crypto Crimes