With increasing reports of debanking within the crypto sector, one solution suggests the importance of fostering stronger relationships between cryptocurrency businesses and the traditional banking industry.
One executive from global cryptocurrency exchange OKX suggests relationship building as a viable strategy to address the growing challenge of debanking in the cryptocurrency industry.
Understanding the Debanking Phenomenon
Debanking refers to financial institutions closing the accounts of customers, typically as part of a risk management strategy. This phenomenon has been seen affecting a number of industries, with cryptocurrency businesses reportedly being among the most impacted.
Cases of Debanking in Crypto
There are numerous examples of prominent crypto businesses losing access to banking services. Over the past two years, several businesses in the field, including Coinfloor, Bitfinex, and others, have faced this challenge. This trend points to increasing caution from traditional financial institutions when it comes to working with cryptocurrency companies.
Industry Response
Given this ongoing issue, industry players are calling for a response. A popular viewpoint is that to counteract debanking, stronger relationships should be built between cryptocurrency businesses and traditional financial institutions.
The OKX Executive’s Take
An executive at OKX, a leading global cryptocurrency exchange, has voiced support for this approach. The executive argues that fostering these relationships can help mitigate potential risks and bridge the gap between the two industries. By doing so, it might be possible to alleviate banks’ concerns and reduce the instances of debanking.
Favoring Dialogue and Transparency
The OKX executive further elaborated on the need for ongoing and open dialogue between the two sectors. According to him, to build trust and understanding, it’s necessary to keep the lines of communication open. At the same time, having transparent operational procedures could also aid in easing the worries of traditional financial institutions.
Regulatory Compliance
Fulfilling necessary regulatory requirements is a significant step in building trust with traditional banks. Demonstrating compliance with money laundering laws, for instance, can reassures banks of a cryptocurrency business’s legitimacy and commitment to following legal protocols.
Future Prospects
If the above-mentioned measures are taken, the future could see a reduction in debanking issues. However, it’s necessary to bear in mind that the ultimate goal is not just to avoid debanking but to foster positive and mutually beneficial relationships.
Building Bridges
Moving forward, the crypto sector and traditional banking industry should strive to build bridges, not walls. Through ongoing dialogue, transparency in operations, and adherence to regulatory compliance, it’s possible to construct a future where both industries can thrive without compromising on their respective values and goals.
With the cryptocurrency industry continuing to grow at an exponential rate, it’s more important than ever that these issues are addressed to ensure the continued development and stability of both sectors.
