- Crypto.com is facing challenges in maintaining proper banking services due to issues with its banking partners.
- The platform lost the ability to accept US dollar deposits and can now only provide euro-denominated banking services to users in the European Economic Area.
- Despite the challenges, the data from the blockchain shows that the platform continues to receive healthy deposits and the company is working to find a trusted partner to solve its banking problems.
Crypto.com cryptocurrency exchange faces challenges in maintaining enough fiat outflows for its users. The platform lost the ability to accept US dollar deposits in January due to problems with its banking partners, and can now only provide euro-denominated banking services to users in the European Economic Area (EEA).
However, the exchange has faced turmoil due to its relationship with two banks and a broad decline in the cryptocurrency industry. Crypto.com’s previous banking partner, Transactive Systems, was ordered to stop working with cryptocurrencies in January due to “serious violations” of money laundering laws. Additionally, Crypto.com’s US partner bank, Metropolitan Commercial Bank, exited the cryptocurrency industry in January following a review by its board of directors.
Despite these challenges, blockchain data shows healthy deposits for Crypto.com, with a currency exchange balance of $3.6 billion and a stablecoin balance of $776 million. Additionally, it has seen a positive net flow of $248.8 million over the past week. There are currently 297 active addresses for CRO, Crypto.com’s token exchange, a proxy for the number of power user traders on the platform (exchange token holders get discounted transaction fees).
This number has declined from around 1,100 in mid-January, during the mini bull market, and 10,000 when the exchange bought the stadium sponsorship rights for the Los Angeles Lakers basketball team. However, CRO is down 16% in the last 30 days and 82% in the last year.
It is crucial that cryptocurrency exchanges maintain adequate fiat outflows to ensure liquidity and affect the ability of digital asset prices to rise. Market analysts attributed a 10% correction in Bitcoin prices in January to Binance’s disruption of US dollar transfers.
An exchange that only has the ability to serve users in one part of the world and then in euros, a much less liquid currency for cryptocurrencies (most cryptocurrency trading pairs are denominated in US dollars), will have questions about its liquidity.
“Recently, our euro wallet service provider reduced access to EEA residents through the Single System for Euro Payments (SEPA),” a Crypto.com spokesperson told CoinDesk. “As the intended purpose of SEPA is to facilitate local borderless transfers between network participants within the EEA, euro deposits and withdrawals through this service provider are not available to those who do not reside in the EEA,” added the spokesman.
Although Crypto.com faces significant challenges in its quest to maintain adequate banking services for its users, the platform is still working to find a trusted partner and migrated to a new payment provider in January. Additionally, the platform still offers the ability for users to purchase cryptocurrency with a credit card and began waiving fees for new users during the first week in September.
In short, Crypto.com faces significant challenges in maintaining adequate fiat outflows for its users due to issues with its banking partners. However, the data from the blockchain shows that the platform continues to receive healthy deposits, and the company is working to find a reliable partner to solve its banking problems.
