CoinMetro CEO: Challenger banks primed to fill crypto service gap

Challenger banks could step into a cryptocurrency gap left by risk-averse market participants, according to Kevin Murcko, CEO of CoinMetro.

“Challenger banks can and are disrupting the traditional system by finding ways to bank companies, mainly SMEs, that are considered higher risk than legacy competitors,” said Murcko, in an email. “Remember challenger banks still rely on traditional banking infrastructure, so this is one way they can actually start to gain a more solid leg up.”

Revolut, which offers banking services in the UK, introduced a way to buy cryptocurrency on its mobile application in December 2017. To date it is the only UK-based challenger offering this capability. Starling Bank and Monzo have stated in the past that their services will not support cryptocurrency.

Cryptocurrency exchange Coinbase is rumoured to be signing a partnership with UK challenger ClearBank after having a similar agreement terminated by Barclays, according to CoinDesk sources. ClearBank will be used to maintain the exchange’s access to the Faster Payments Service and give cryptocurrency firms access to a UK-based account.

Barclays and Coinbase signed their partnership in March last year, as the exchange expanded to Europe from its home base in San Francisco. Combined, both moves provided Coinbase users and traders with easier access to the purchasing of cryptocurrency with Sterling, as well as giving it access to the Faster Payments Service. The exchange had also been granted an emoney licence by the UK’s Financial Conduct Authority (FCA) that same year.

Coinbase’s UK chief executive Zeeshan Feroz said at the time of the deal that having Sterling payments with Barclays would reduce costs and improve the customer experience. He added that it took time to get Barclays on board as the bank wanted to be sure Coinbase could prevent money laundering.

“Banks do not like risk,” said Murcko. “[They] need to be stringent with their onboarding, listing, and KYC policies and should be aware, internally, of the risks associated with going outside the boundaries of those set frameworks.

“The climate around crypto in terms of how traditional banks viewed [it] was much worse when Barclays on-boarded Coinbase, so either their risk tolerance changed drastically, or this was a business decision.”

According to a July survey from trade body CryptoUK, 73 percent of crypto firms active in the UK have had to open another bank account in a separate jurisdiction to gain access to banking services, while 70 percent stated they were considering a move overseas to avoid complications of working with UK banks.

“Many in the crypto sector, including CryptoUK’s members, want to call the UK home, invest in innovation and grow their operations here,” said Igbal Gangham, chair of CryptoUK, in a statement accompanying the survey. “[But] the often-impossible task of opening a bank account is forcing more companies to turn to other jurisdictions, which are often riskier and offer less certainty to companies.”

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