For years, crypto companies have been shut out by the banking system in the United States. However, after the Trump administration took office, many financial technology companies extended an olive branch to crypto companies.
Original:The Great Crypto Re-Banking Has Begun
Author:Joel Khalili, Wired Magazine Reporter
Translator:Saoirse, Foresight News
Cover:Photo by Anthony DELANOIX on Unsplash
[The rest of the translation continues in the same manner, fully translated to English while preserving the original HTML structure]This situation has created opportunities for small financial technology companies to expand their deposit base by attracting cryptocurrency industry clients. "Nowadays, entrepreneurs in the cryptocurrency field basically choose platforms like Mercury or Meow," Khan said, "Meow is particularly proactive, immediately reaching out to founders whenever a crypto company announces funding."
These financial technology companies often market themselves as "crypto-friendly", offering integrated services like stablecoin transfers, and are far less rigid than traditional financial institutions. Taking Meow as an example, its CEO Brandon Arvanaghi, around 30 years old, manages his LinkedIn profile like a TikTok account, complete with short videos.
"The technology of these American financial technology companies is far more advanced than any obscure bank in the Cayman Islands or Switzerland. Whether in platform functionality, customer service, or other aspects, they are superior," McIntyre commented.
Mercury declined the interview request for this article, while Meow and Brex did not respond.
In fact, these financial technology companies play a "software layer" role: operating on the basis of traditional banks with US licenses, responsible for user interface development and customer expansion, while deposit management is handled by partner banks. Specifically, Meow collaborates with Grasshopper Bank, while Brex and Mercury have established relationships with multiple banks. This model was widely used in the US during the COVID-19 pandemic, when the pandemic forced banks to accelerate digital service transformation.
"Ideally, this model allows banks to access more advanced technology," said Craig Timm, Senior Director of Anti-Money Laundering at ACAMS. ACAMS primarily conducts financial-related certification programs, and Timm previously worked as a financial crime expert at US Bank and the US Department of Justice. "For financial technology companies, this means they can focus on their strengths - product development, marketing, and acquiring new customers - without spending massive resources and effort to obtain banking licenses (a process that is both complex and expensive)."
However, such collaborations typically require financial technology companies to follow the rules set by partner banks, including restrictions on the types of customers they can serve. For instance, a Mercury spokesperson stated that the company cannot provide account services for crypto enterprises that custody client funds, including exchanges.
"They are just adding a shell on top of someone else's bank," explained McIntyre, who previously worked at Brex, "They must adhere to the partner bank's underwriting requirements, regulatory provisions, and specific customer admission standards."
Timm noted that in the past, expanding into new business areas (such as cryptocurrency-related services) has been a source of friction between financial technology companies and partner banks. Financial technology companies are eager for rapid expansion, while partner banks must ultimately bear responsibility for maintaining license compliance, including strict anti-money laundering controls.
"Such collaborations often fail due to a lack of consensus," Timm added, sometimes resulting in "inconsistent risk appetites".
This leaves crypto enterprises in an uncertain situation: although financial technology companies are currently willing to provide US bank accounts, the partner banks may revoke authorization in the future.
When asked whether partner banks have committed to long-term service for cryptocurrency clients, both Meow and Brex did not respond. Mercury's spokesperson Nic Corpora stated that the company maintains close collaboration with partner banks "to ensure alignment of risk appetites, so that they can provide the best long-term support for clients after acceptance".
During the tenure of a president who appointed a regulatory official supporting cryptocurrency development and promised to end the so-called "Operation Chokepoint 2.0", this risk seems distant. But what about after Trump leaves office?
"From a risk management perspective, it would be unwise for companies like ours to rely solely on accounts from US financial technology companies," McIntyre said, "The government changes, interpretations of the law change, but the legal text itself remains unchanged."
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