Banks break up with crypto platforms; payment gateways feel the pain

The crypto industry is back at square one. With major banks ending all business relationships with crypto platforms, payment gateways are forced to cease settling crypto transactions and are staring at millions of dollars in lost business as a result.

While the regulatory dillydallying keeps straining the booming crypto industry, active traders are expected to revert to direct person-to-person payments for crypto transactions.

Payment gateways are in a fix as a result. They charge a premium of around 2% for settling crypto transactions, twice the normal 1% rate offered to other businesses, according to the founder of a large crypto exchange platform in India. 

Industry estimates suggest $400-500 million of daily trading volume across crypto exchanges in India. Even at a conservative estimate, if 1% of this volume is new deposits or withdrawals every day, the banking ecosystem could be looking at settling $5 million worth of transactions daily, or $150 million of monthly settlements.

“As per a rough estimate, payment gateways could be making around $4 million of revenue per month through this business,” said the crypto exchange founder. He added that while the business teams at banks are keen to grab a share of this opportunity, the risk teams have flagged these transactions.