▼ Summary
– Azeem Khan faced repeated rejections from US banks when trying to open an account for his crypto startup, eventually settling for offshore banking and crypto assets.
– Crypto founders commonly struggle with US banks refusing services, hindering their ability to manage funds, pay employees, or accept dollars.
– Under Trump’s administration, fintechs like Meow and Brex have begun offering banking services to crypto firms, easing operational challenges.
– Despite the improved banking access, crypto firms remain vulnerable to political shifts as no laws have been enacted to guarantee long-term banking access.
– Allegations of banking discrimination under Biden led to the FIRM Act proposal by Republicans, aiming to prevent banks from denying services based on “reputational risk.”
Navigating the shifting landscape of crypto banking has become both easier and more uncertain for digital asset entrepreneurs in recent months. When Azeem Khan, founder of crypto startup Morph, secured $19 million in seed funding last year, he faced an unexpected hurdle: traditional U.S. banks repeatedly rejected his business account applications. After six frustrating months, he resorted to parking funds offshore and converting portions to cryptocurrency, a common workaround for many in the industry facing similar roadblocks.
The banking challenges for crypto firms have been well-documented, with accounts suddenly frozen or denied outright, leaving companies unable to process payroll, hold investor funds, or transact in dollars. Khan describes it as an “understood reality” among founders, until recently. The political climate shift following the 2024 election has sparked a noticeable thaw, with fintech players like Mercury, Brex, and Meow now actively courting crypto businesses. Khan’s latest venture, Miden, successfully raised $25 million with far fewer banking obstacles, signaling a potential turning point.
Despite the improved access, the situation remains precarious. While the current administration has voiced strong support for digital assets, even pledging to make the U.S. the global leader in crypto innovation, no concrete legislation safeguards long-term banking access. “The rules could flip overnight depending on who’s in office,” Khan cautions. This uncertainty stems from years of tension between regulators and the industry, with crypto advocates accusing federal agencies of covertly pressuring banks to cut ties through initiatives likened to “Operation Chokepoint 2.0.”
The reference harks back to a controversial Obama-era policy where banks allegedly avoided certain high-risk sectors, including payday lenders and adult entertainment. Crypto leaders argue they’ve faced similar deplatforming under vague “reputational risk” justifications. Recent congressional hearings have scrutinized these claims, culminating in the proposed FIRM Act by Senate Republicans. The bill seeks to prevent banks from denying services based on subjective risk assessments, though its legislative future remains unclear.
For now, crypto founders are cautiously optimistic. Easier access to banking removes critical operational barriers, but without lasting legal protections, the industry’s financial infrastructure could remain vulnerable to political winds. The coming months may determine whether this reopening marks a permanent shift or merely a temporary reprieve.
(Source: Wired)
