Unbanked, a fintech company specializing in cryptocurrency custody and payment services, has announced its decision to cease operations due to the stringent regulatory landscape for cryptocurrencies in the United States. Despite the initial belief that setting up their business in the US would be a strategic long-term move, co-founders Ian Kane and Daniel Gouldman expressed disappointment after five years of operation.
Unlike other crypto companies that found success by operating offshore and avoiding strict regulations, Unbanked chose to engage with regulators and comply with their complex processes to gain a favorable market position. This approach, however, resulted in significant time and cost burdens.
The co-founders openly criticized US regulators for obstructing banks and fintech companies from supporting cryptocurrencies, even when these entities aim to comply with regulations. This comes despite Unbanked’s recent successful partnerships, including a collaboration with Mastercard.
Unbanked had anticipated a $5 million funding injection, but this did not materialize. The co-founders attribute this setback to the US regulatory climate for cryptocurrencies, which severely limited Unbanked’s ability to raise capital and operate as a self-sustaining business.
Unbanked’s closure underscores the challenging circumstances faced by crypto businesses in the US. Other companies, such as crypto exchange HotBit, have also faced difficulties, leading to the winding down of operations. HotBit attributed its deteriorating situation to various factors, including the collapse of FTX and a former team member who became the subject of an investigation in August 2022.
In another development, Digital Currency Group (DCG), the parent company of Genesis Global Capital, has reportedly been unable to meet its obligations of approximately $630 million to creditors. This situation has sparked discussions among stakeholders, including Genesis, the Unsecured Creditors Committee (UCC), the Ad Hoc Group of Creditors (AHG), and Gemini, regarding potential forbearance options to prevent a default by DCG.
Meanwhile, Binance, the world’s largest cryptocurrency exchange company, faces allegations of violating US financial rules by mixing customer funds with company revenue. Binance has refuted these allegations, maintaining that its accounts were exclusively dedicated to facilitating customer transactions.
However, the spotlight on Binance underscores the ongoing challenges faced by crypto firms operating in the US, where regulatory clarity and compliance remain significant concerns.
