Startups focused on products and services based on bitcoin have never had an easy time opening bank accounts – or maintaining positive relationships with those firms. The problem? Bitcoin-related clients are frequently viewed as high-risk by banking institutions, and thus far few banks have shown an interest in going through the process of mitigating that risk.
This is a long-standing issue that has sparked controversy in the past, but given the broader issue of de-risking by banks worldwide, it’s perhaps unsurprising that bitcoin startups would find themselves in the crosshairs of bank compliance departments.
Yet those risks haven’t kept every bank from opening its doors to bitcoin startups. Silvergate Bank, based in La Jolla, California, was one of the earliest institutions to buck that trend.
Silvergate is on the verge of opening its sixteenth bitcoin bank account, and its chief executive officer, Alan Lane, says the benefits of his bank’s early adopter status might be in jeopardy.
Lane told CoinDesk: "If other banks are shying away from this, it probably wouldn’t be that difficult to generate business if they could create a compliance process that worked." The process of developing this kind of more inclusive compliance process – and as a result helping to ease concerns over the perceived risk of bitcoin businesses – began in 2013, according to Lane, who previously oversaw Silvergate’s manufacturing and retail accounts, ranging in size from $10m to $50m in annual revenue. Buy some bitcoin
Lane, who calls himself a "Joe-six-pack kind of guy" as opposed to a coder, was originally only interested in bitcoin on a personal level.
He made his first bitcoin purchase using Coinbase in mid-2013, looking to enable an ACH transfer and learn more about the process of actually obtaining and using a digital currency.
That research allowed him, he explained in interview, to trace […]
