Omni co-founder tells his entrepreneurial experience: How does the banking system stifle cryptocurrency innovation?
Written by: Austin King, Co-founder of Omni Network
Compiled by: Luffy, Foresight News
Recently, a16z co-founder Marc Andreessen revealed that many founders have been threatened by the banking system. I am one of them: I have never spoken about this publicly for fear of retaliation.
So what does it actually look like when it happens to you? My first personal experience was in 2021 when I tried to open my company’s first bank account.
The beginning of the story
When I was ready to open our first account, I was rejected by multiple banks. Whenever you open a business account, the bank will ask what your company does. If you mention anything related tocryptocurrency” or “Web3”, you’ll get rejected. After mentioning those terms and getting rejected multiple times, you start to realize what’s going on, and I started using phrases like “early-stage fintech startup”. Eventually,Xiaobai NavigationIt worked, and I was able to open a bank account and conduct business in the country.
Repeated blows
Is that the case? No, it is a repetitive and ongoing process. Once you have an account, you realize that having just one account is a serious risk to the business. You eventually receive an email with a subject line like this:
You would open it, but the request really didn't make much sense because they already had the documents they requested, but you would still comply with the request to submit the documents. The problem is, complying didn't solve the problem, and even though we responded promptly with all the requested documents, our account was still arbitrarily frozen.
This account freeze prevented us from paying salaries. My team believed in me a lot, but when a company can’t pay salaries, you definitely start to doubt whether this is a stable place you can work for long term. When you hear from your boss “Honestly, we have money, we submitted all the required documents almost immediately, and I really believe that we were targeted because we work in cryptocurrency”, you are not sure. Here is another example:
Sounds reasonable, right? They just want a few documents and gave us 5 business days. The problem is: sometimes they don’t even respond in 5 business days; it’s not a matter of submitting the documents, it’s a matter of them approving them. They just re-ask for the same documents that have already been submitted, and don’t explain what’s wrong with them. This strategy embodies the way the SEC has been stifling cryptocurrencies in the US for the past 4 years: not making the rules clear, letting people operate in the fog, and strangling them with bureaucratic ambiguity instead of attacking them directly.
We are not the only ones. I have spoken to many of the investors at Omni who have seen this happen in many of their portfolios, to the point where their portfolio support teams have proactively helped teams set up multiple separate bank accounts to mitigate risk.
Why can I talk about this now?
Because if people like Marc Andreessen were speaking out about this, I felt less likely to be singled out. I had not spoken out publicly before because I was worried about putting myself and my business at further risk. I published this post primarily to provide further evidence that this is a real problem that is stifling innovation in the United States. Over the past 4 years, the government has actively pushed cryptocurrency innovation to move overseas. I think this is really dangerous for the United States. We need to lead in crypto, not push innovation to arbitrary countries like the Bahamas. Crypto is a technology that has the potential to greatly increase the self-sovereignty and personal freedom of people all over the world. I really can't think of another technology that fits the "American Dream" as well as cryptocurrency.
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