- The London-based start-up DAG Global is applying for a banking licence in the UK to bridge the gap between crypto-companies and the traditional banking system.
- For many start-ups in the cryptocurrency sector, access to a bank account is still a significant problem, which DAG Global wants to change.
The cryptocurrency industry has been struggling with an inherent problem that affects exchanges and operators of other crypto services for quite some time. Worldwide, it has been difficult for them to establish relationships with commercial banks to provide Fiat gateways on the one hand and to manage their own finances on the other. To overcome this problem, many start-ups around the world are founding new banks to provide services specifically for the crypto industry.
In Great Britain, the start-up DAG Global is trying to obtain a British banking license to bridge the gap between crypto companies and banks. As the Financial Times reported, the London-based company is working on resubmitting its license application next month in order to become the “first digital asset merchant bank” in the UK in 2021.
The London-based start-up, founded in 2018, is struggling with a lack of understanding and the reputation problem of the crypto industry, according to the report. According to the report, DAG Global has held “constructive talks” with the British authorities, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). Nevertheless, both authorities are issuing warnings against the use of cryptocurrencies, such as Bitcoin, for criminal activities. So far, however, no “red flag” has been waved.
DAG Global originally submitted its application in May 2019. However, the approval of the application was delayed due to official blockades. This also delayed the plan to start business activities already in 2019. Nevertheless, Sean Kiernan, CEO of DAG, was optimistic and believes that “it is a lack of understanding and the reputational risk” that has blocked the efforts made so far. He further stated that the cryptocurrency industry can be a “cleaner sector” than the mainstream financial industry.
The key to a bank-independent crypto industry
DAG Global writes on its corporate website that a full UK banking license would allow it to offer blockchain and crypto entrepreneurs a full range of banking services to bridge the gap between fiat and crypto currencies:
Our robust, industry-leading digital banking platform is being built using advanced and robust technologies, which enables us to facilitate cost-effective transactions within and across traditional fiat currency and digital assets – all to the highest globally-established standards of compliance and security.
The company joins a number of companies worldwide that share a similar objective. In the USA, Silvergate Bank was founded to provide banking services to crypto companies. Silvergate, previously a small San Diego-based company, has grown rapidly since the switch to cryptocurrency business and has been listed on the New York Stock Exchange since late last year.
As demonstrated in the past, even well-established companies such as Coinbase are having problems gaining access to the fiat banking sector. The crypto exchange, which is strongly focused on compliance, also had a hard time building banking relationships in the UK. In 2018, Coinbase opened a bank account with Barclays, which was closed last year.
Stephanie Ramezan, Chief Commercial Officer of DAG told the Financial Times
We’re being approached on a daily basis by corporates in the space because people are fed up with what they’re faced with to meet basic business banking needs at the moment.