Crypto fintech firm Unbanked, which provides crypto custody and payments services, recently announced its decision to close down due to the harsh regulatory environment for cryptocurrencies in the United States. In a May 26 blog post, Unbanked cofounders Ian Kane and Daniel Gouldman stated that their initial belief that building the company in the United States would be the best long-term strategy turned out to be incorrect five years later.
While other cryptocurrency companies managed to grow rapidly off-shore by avoiding stringent regulations, the founders believed that engaging with regulators and adhering to their processes would ultimately benefit Unbanked. Unfortunately, this decision led to significant wasted time and excessive costs. The cofounders commented that US regulators are actively trying to stop companies from supporting cryptocurrencies, even when these companies are attempting to operate legally.
Despite entering into major deals with other companies, including a partnership with payments giant Mastercard, Unbanked’s efforts were hampered by the lack of a promised $5 million funding injection. The founders attribute this to the regulatory climate for cryptocurrencies in the US, which limited the company’s ability to raise capital and maintain a self-sustaining business.
Unbanked is not alone in facing challenges brought on by US regulations. In recent times, several other cryptocurrency firms have been forced to close their doors, such as Bitcoin Lightning Network payments firm BottlePay and crypto exchange HotBit. While factors such as the collapse of FTX and the temporary depegging of USD Coin (USDC) played a role in Hotbit’s decision, the primary driver came from a former team member being the subject of an investigation.
The impact of strict regulations in the US has left some firms struggling to thrive. As a result, many industry insiders are left wondering if the stifling regulatory environment is the best approach for the future growth and development of the cryptocurrency space. While there’s no denying the importance of proper oversight and regulation to protect consumers, some argue that the current climate may be too restrictive and detrimental to the long-term success and adaptation of cryptocurrencies, hindering the industry’s garnering of mainstream acceptance.
Source: Cointelegraph
