Unbanked, a cryptocurrency fintech firm specializing in crypto custody and payments services, has recently announced its decision to shut down operations due to the challenging regulatory environment for cryptocurrencies in the United States. In a blog post on May 26, Unbanked’s co-founders, Ian Kane, and Daniel Gouldman, expressed their disappointment in the regulatory landscape that hindered their growth and sustainability.
When Unbanked initially launched, it believed that establishing its presence in the United States would be advantageous in the long term. They aimed to engage with regulators and comply with the stringent regulatory processes, expecting it would position them favorably in the industry. However, after five years of operation, the company found that this approach led to wasted time and excessive costs, without the expected benefits.
According to the co-founders, US regulators are actively impeding companies, including banks and fintechs, from supporting crypto assets, even when they strive to do so within the boundaries of regulations. Unbanked’s decision to wind down operations comes despite recently securing significant partnerships, such as one with payments giant Mastercard.
The firm had been anticipating a $5 million funding injection that would have allowed it to continue operations and expand. Unfortunately, the expected funds have not materialized, and the co-founders attribute this to the regulatory climate surrounding cryptocurrencies in the US, which limited their ability to raise capital and maintain a self-sustaining business.
Unbanked has advised its clients to initiate the withdrawal of their funds as soon as possible. However, Unbanked is not the only company facing these challenges. BottlePay, a Bitcoin Lightning Network payments firm, also recently announced its closure, with all services set to cease by June 24, 2023. While no specific reason was provided for BottlePay’s decision, the closure indicates the growing struggles faced by crypto-focused businesses.
More crypto firms ceasing operations
HotBit, a crypto exchange, also declared its intention to wind down operations and urged its customers to withdraw funds promptly. While HotBit acknowledged the impact of the collapse of FTX and the temporary depegging of USD Coin (USDC) on its operations, it highlighted that the primary cause of its deterioration was an investigation involving a former team member in August 2022. The investigation forced the exchange to suspend its operations for weeks, significantly impacting its business.
Additionally, Teressa, a fractional-ownership NFT platform, recently announced its permanent closure. The company cited its corporate structure and financial situation as the reasons preventing it from continuing its operations. Co-founder Andy Chorlian shared an emotional tweet about the difficult decision to wind down all operations over the next few weeks.
These closures highlight the increasing challenges faced by cryptocurrency companies, particularly in the United States. Regulatory uncertainties, strict compliance processes, and difficulties in raising capital have led to a harsh business environment for crypto startups. As the crypto industry evolves, these hurdles may continue to affect the viability and sustainability of companies operating in this space.
