Comment by anonymoushn
1 year ago
I guess it is surprising that crypto service providers cannot come to an agreement with banks by just paying more money for the service or by implementing some rules for their users which would allow some portion of their bank deposits to be held in slightly less cash-like assets.
It's more than just money: A payment processor is not all that different from a crypto exchange in their relationship with the bank: It's a very special company that can bring real risk to the banks underneath, so they have to do a lot of regulatory work internally to keep working together. The Stripes and Adyens of the world spend efforts in regulatory because they have to keep the bank happy, but they find those efforts just cost money, not harm the actual goals of the business.
Many of the crypto services believe that no, there's no way they'll do what the bank tells them and still remain useful to their clients. They'd have to compete with the truly off-the-regulatory-world competitors, and probably lose a lot of business there. So they get unbanked, in the same way that I'd get un-bared if I decided to keep showing up at said bar with the same clothes as Donald Duck.
I think one of Patrick's points is that the real cost to the bank for providing these services to crypto companies is more than the entire profits of the crypto companies. So there is no mutually agreeable meeting point.
I think he only made that claim referring to the profits that the banks earn from their relationships with the crypto companies, not the total profits made by the crypto companies themselves (though both could be true).
These are pretty similar/related things. The maximal profit the bank can earn from the crypto company relationship is 100% of the crypto company's profits.
Maybe that's why Coinbase charges such high fees.