Prasos, a Finnish bitcoin services company, has seen four of its five banking partners terminate their relationships, leaving the firm reliant on a single bank. CEO Henry Brade attributes the crisis to a dramatic increase in cryptocurrency transaction volumes and a lack of clear regulations.
Banks Pull the Plug
Prasos offers cryptocurrency purchase and sale services to customers in Finland. According to the company, the banks that ended partnerships include S-Bank, the OP Group, Saastopankki, and Nordea Bank AB. Only one banking institution remains engaged, but Brade fears that account could also be closed soon.
In an interview with Bloomberg, Brade stated: “We’ve realized that the growth in international transaction volumes started to disturb the banks.” Prasos experienced a transaction volume increase of nearly 1,000% in 2017 compared to the previous year. The explosive growth heightened banks’ risk perception regarding crypto-related businesses.
Brade also blamed the lack of regulatory clarity for exacerbating the situation. He expressed hope that regulators would soon develop a clear legislative framework to boost confidence among financial institutions.
Compliance Efforts Not Enough
Despite taking extra compliance steps, Prasos failed to retain its banking partners. “We’ve created identification practices which we have taken into use in March, and they comply fully with anti-money laundering laws and regulations, even though authorities do not even require this from us,” Brade explained. However, banks provided little feedback on how to resolve the issues before terminating services.
Hanna Heiskanen, a senior adviser at Finland’s Financial Supervisory Authority (FSA), noted that “cryptocurrency trading places are not currently under the regulatory mandate of the Finnish FSA,” calling the situation “an affair between the company and the bank[s].” This indicates no immediate regulatory intervention.
“The risk is that we’ll see our last bank account closed before we can get the next one opened. That would freeze our business,” Brade warned. Without banking access, Prasos cannot process fiat currency transactions, effectively halting its operations.
Prasos is actively seeking new banking partners, but the tension between the cryptocurrency industry and traditional banks continues to mount. Similar scenarios may unfold for other crypto companies as global regulation tightens.