Unbanked, a crypto fintech firm providing custody and payment services, is closing due to the tough U.S. regulatory environment for cryptocurrencies.
Unbanked's co-founders believed initially that establishing the company in the U.S. would be advantageous, as mentioned in their May 26 blog post. However, after five years, they realized that engaging with regulators and following their processes did not give them an advantage as they had hoped.
The founders stated that U.S. regulators actively hinder companies, including banks and fintech firms, from supporting crypto assets, even when these companies aim to comply with regulations. This led to wasted time and excessive costs for the Unbanked.
Despite securing significant partnerships, such as one with Mastercard, Unbanked faced challenges in raising funds. The co-founders mentioned that they were expecting a $5 million investment that would have allowed the company to continue and expand its operations. However, the regulatory climate in the U.S. limited their ability to attract capital and sustain their business.
Another crypto exchange, HotBit, also recently announced its closure and urged its customers to withdraw their funds promptly. HotBit attributed its deteriorating operations to various factors, including the collapse of FTX and the temporary depegging of USD Coin (USDC). Additionally, a former team member who became the subject of an investigation in August 2022 further impacted their business.
Similarly, Teressa, a fractional-ownership NFT platform, shut down its operations due to its company structure and financial situation. The co-founder, Andy Chorlian, shared the difficult decision to wind down all operations over the next few weeks and advised clients to withdraw their funds as soon as possible.
Crypto Firms Face Regulatory Hurdles: Unbanked and BottlePay Shut Down Operations
The recent closures of Unbanked and BottlePay highlight the difficulties faced by crypto firms amidst regulatory challenges. Unbanked, a crypto fintech firm, has decided to shut down due to the demanding regulatory landscape for cryptocurrencies in the United States. Similarly, BottlePay, a Lightning Network payments company, recently announced its closure without specifying the exact reason.
Despite attempts to engage with regulators and comply with regulations, these companies have encountered obstacles in raising capital and sustaining their operations. It is evident that navigating regulatory requirements and accessing sufficient funding pose significant challenges for crypto businesses, impacting their ability to thrive and expand in the industry. The current regulatory environment has proven to be a significant factor influencing the decisions of these companies to wind down their operations.
Also read- Gemini Selects Ireland as European Base Amid US Crypto Challenges
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