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Financial giants including JP Morgan, HSBC closing down bank accounts of cryptocurrency companies to hinder adoption, finds report




Financial giants including JP Morgan, HSBC closing down bank accounts of cryptocurrency companies to hinder adoption, finds report
Source: Pixabay

Companies operating in the decentralized cryptocurrency space have often been at loggerheads with their traditional counterparts. Large financial institutions, which control systems that facilitate monetary deposits and withdrawals, see cryptocurrency newbies as ‘disruptors’ and some have even shown these crypto-companies the door, preventing them from using their banking services.

According to a report by Bloomberg, crypto-companies have often been “refused banking services” by top financial giants like HSBC Holdings Plc and JP Morgan Chase & Co.

Traditional financial institutions have been wary of the cryptocurrency community since it emerged over a decade ago, with several top-financiers labeling the market a “scam” and a “delusion”.

Despite the cryptocurrency industry wanting a laissez-faire regulatory system, some want the government to step-in, bringing in limited, but necessary guidelines so that frauds and manipulations do not materialize. This was attested to by Robby Houben, a Professor at the University of Antwerp, who also co-authored a paper on crypto-related financial crime and presented it before the European Parliament.

Despite Bitcoin [BTC] coming a long way since its Silk Road days, a one-size-fits-all ban is being implemented by big banks to keep out crypto-companies.

Sam Bankman-Fried, Chief Executive Officer of Alameda Research, a digital-assets trading firm in California said,

“The standard answer of `just go to your local Chase branch’ doesn’t work in crypto. It’s not illegal for big banks to bank the crypto industry, but it’s a massive compliance headache that they don’t want to put the resources in to solve.”

Top cryptocurrency exchanges were also affected by this ‘shuttering’. Among them, Kraken saw its bank accounts with JP Morgan Chase and Bank of America Corp being closed on short notice. Jesse Powell, the exchange’s CEO, went on to claim that he had to “employ the arts of a money launderer” to stay afloat.

Some crypto-proponents are however, looking at the problem as an opportunity for further adoption, moving away from the traditional banking-and-fiat sector. In fact, salaries in many cryptocurrency companies are done via digital assets, including fiat-backed stablecoins. Mark Lamb’s ConFLEX, a cryptocurrency derivatives exchange in Hong Kong is one such example.

Lamb stated,

“The banking system has never been friendly to crypto, and while maybe that made some sense in the early days, continuing to label all crypto businesses as high-risk is indefensible and protectionist. I’m washing my hands of them and now avoid banking altogether.”

In light of this clash, cryptocurrency companies are vying for better banking relationships to strengthen their financial base.

Ben Sebley, the Head of Brokerage at NKB Group summed up the debacle, stating,

“Denying basic banking is madness, impedes sector growth and forces companies to get creative to solve the problem.”

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Bitcoin will likely be valued at $100,000 with a market cap of over $2 trillion before the end of 2021





Bitcoin [BTC] will likely reach $100,000 with a market cap of over $2 trillion before the end of 2021
Source: Unsplash

The entire cryptocurrency market seems to be on the brighter side of the market since the beginning of the year. A majority of the coins have recorded significant recoveries from their 2018 slump, a period during which most coins lost over 90 percent of their value, when compared to their all-time highs. Among all the coins in the market, Bitcoin [BTC] aka the digital gold, was noted to be making a massive comeback as the coin breached the $11,000 mark after nearly 15 months. The coin however, soon retracted to settle below the $11,000 level.

According to CoinMarketCap, at press time, Bitcoin was trading at $10,887.27 with a market cap of $93.549 billion. The coin recorded a 24-hour trading volume of $20.757 billion for the past 24 hours and saw a massive rise of over 17 percent over the past seven days.

Anthony Pompliano, Co-founder of Morgan Creek Digital Assets, predicted that the largest digital currency could rise to reach $100,000, before the end of 2021. Pomp added that he was around 70-75 percent confident in this prediction. He stated,

“As I have previously said, making predictions is difficult […] Part of my process as a professional money manager is forming a thesis (price target), identifying a timeline (date), and establishing a confidence level. And then constantly re-evaluating those three aspects of my thought process as I receive new information.”

Pomp however, listed six pointers that have to be understood beforehand. First, this prediction is not an investment advice, and people should do their own research before investing in the digital currency. The second is with respect to Bitcoin’s volatility, with Pomp remarking that since it was a highly volatile market, the coin could witness a significant fall before being valued at $100,000. He stated,

“I anticipate that there will be numerous 20-30% drawdowns from new all-time highs as the asset continues to appreciate in value. These mini-boom/bust cycles should not cause panic, but rather need to be understood as natural market dynamics whenever an asset gains significant value in short periods of time.”

Further, the partner of the investment firm stated that the rise would be driven by several catalysts. This includes institutional adoption, exchange-traded funds and retail product approvals, global instability, governments all across the globe manipulating currencies, markets and economy. He went on to state,

“The market cap of Bitcoin will reach $2+ trillion when Bitcoin is worth $100,000. This is less than 1/3 the market cap of gold and less than 1/40 the global money supply.”

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