Since the creation of Bitcoin and the first entrepreneurial projects around blockchain technologies in France, the “crypto” industry and more broadly blockchain technologies have experienced great difficulty in building trust with the banking and financial sector. However, this state of affairs has been little documented. This is why Adan wanted to carry out a qualitative and quantitative assessment of the problems encountered by the players by giving them the floor through a survey open to all between July and September 2020.

Today, Adan publishes a report that presents the results of the survey. This document provides an overview of the relationships between banking, payment and e-money companies and crypto-blockchain players.

This report is based on an examination of the 28 non-anonymous responses to the survey in the 2-month period (mid-July to mid-September) during which the survey was made available online. Among the 28 companies, 26 (or 93%) own, buy, sell or interfere with digital assets. For almost 64% of them, these transactions represent at least half of their annual business volume.

General state of relations between financial institutions and crypto-blockchain players in France

When asked to assess the state of the relationship with their financial institution(s) today, the answers are evenly divided between ‘very complicated’ (around 7.5%) and ‘complicated’ (around 22%) on the one hand, and ‘good’ (around 22%) and ‘very good’ (around 7.5%) on the other, with the remainder (around 41%) being neutral. While this general observation seems relatively colourless, 82% of respondents (23) indicate that they have already been confronted with a refusal to open or close one or more bank accounts in France and elsewhere in Europe. This diagnosis spares no one since all French banking groups – banks and “neo-banks” – are singled out by the respondents.

While this general observation seems relatively colourless, 82% of respondents (23) indicate that they have already been confronted with a refusal to open or close one or more bank accounts in France and elsewhere in Europe. This diagnosis spares no one since all French banking groups – banks and “neo-banks” – are singled out by the respondents.

Summary of the survey results

Difficulties encountered in France to open their current account 50 %
Experience of refusing to open or close accounts 68 %
Complicated or impossible access to banking and payment services 45 %
Difficult or impossible access to credit or bank financing  50 %
Impact on customers in their own banking relationships 57 %
Impact on the manager in his own banking relationships 42 %
Relocation of the activity considered or very seriously envisaged  64 %
Relations with financial institutions less difficult in other EU countries 85 %

Initiating and maintaining relations with financial institutions in France: the obstacle course

For the purpose of an activity directly related to digital assets, the majority of respondents have an account opened in France (72%). Of these, 18 (64%) have a bank account, and 2 (7%) have a payment account.

However, of these 18 respondents, half had experienced difficulties in opening their bank account.

Difficulties experienced when opening an account

  • Necessary solicitation of many institutions (up to 11 rejections before finding a bank). 
  • Excessively long delays between application and actual opening or refusal to open the account (up to 2 years for some respondents). Necessary solicitation of many institutions (up to 11 rejections before finding a bank).
  • Negotiation is required at the top of the bank’s hierarchy for a simple account opening. 
  • Clear instructions to bank advisors to block any attempt to open an account for digital asset activity.
  • Additional documentation requested as a result of the activity, pending which the account opening process is frozen.
  • Need to involve a specialist lawyer in the account opening process, in order to “reassure” the bank, these costs being borne by the start-up. Additional documentation requested as a result of the activity, pending which the account opening process is frozen.
  • Intense pedagogical efforts to explain the activity, or deconstruct traditional preconceptions about digital assets. 
  • Despite these efforts, the bank was not interested “in principle”.

Getting an account does not mean that the problems have gone away, and crypto players face other obstacles in the course of their business relationship.

Difficulties experienced after opening an account

  • Quick closing of the account, without any specific reason.
  • Inability to obtain a payment card or cheque book.
  • Impossible to set up a SEPA direct debit.
  • Refusal to grant a bank loan if the actor is not approved by the AMF. Impossible to set up a SEPA direct debit.
  • Refusal of any financing or transactions related to digital assets that may require compliance intervention (i.e. as long as the volume of business related to digital assets remains moderate), or the account will be closed. Impossible to set up a SEPA direct debit.
  • Processing of transfers is very time-consuming and/or conditional on the issue of receipts for each transaction 
  • No access to online banking, requiring, for example, visits to the branch for any transfer. Processing of transfers is very time-consuming and/or conditional on the issue of receipts for each transaction

Faced with these difficulties, access to the banking and payment services needed to carry out their activity is perceived as complicated or even impossible for 45% of respondents. This access is normal for 37% of respondents, and easy for only 18.5% of them.

More peaceful relations in other EU Member States

Half of the respondents have an account in another EU Member State, including Germany, the United Kingdom, Sweden, Ireland, the Netherlands, Lithuania, Luxembourg and Estonia. Only 21% of these actors report having experienced difficulties in this exercise (compared to 50% of actors who opened an account in France, as mentioned in the previous section).

Consistently, 85% of respondents believe that relations are more difficult in France than in other EU countries, with 45% describing them as ‘much more difficult’.

Opening an account and keeping it: what’s the problem?

The reasons given by the various financial institutions very often coincide. 

Firstly, it is the activity carried out by the respondents that leads banking and financial institutions to refuse to open an account for them. Three scenarios were reported by the actors consulted:

  • Crypto activities are explicitly forbidden in the account opening policies of some banks.
  • The exercise of crypto activities is implicitly disqualifying: 
    • Refus d’entrer en relation de la part du conseiller avant même toute prise de connaissance des détails de l’activité, parfois à la seule évocation des mots « blockchain » ou « cryptomonnaies ».
    • Lorsque le conseiller est intéressé, sa hiérarchie ne lui consent pas son aval.
    • Reasons for refusal given are absent or not very precise, such as “the company does not meet the criteria”.

When the most unfounded reasons have been given to actors, some institutions refuse to send a refusal letter.

Secondly, some actors were told by their interlocutors that the law was not considered sufficiently advanced to allow the institution to open an account for them.

Some respondents exercised their right to accounts in the face of multiple refusals. Despite the designation of the Banque de France, the institutions concerned sometimes still refused to open an account. Some respondents (6) then referred the matter to the ACPR, but did not receive the opinion of the Authority required to resolve the situation or, in one case, the Authority blocked the procedure initiated by the Banque de France. In the end, only one was successful.

Difficult relationships that rub off on customers, employees and managers

67% of businesses report difficulties experienced by their customers in their dealings with financial institutions in connection with crypto transactions conducted with them.

Respondents’ accounts of the nature of their clients’ difficulties

  • Accounts frozen / closed when crypto activity is detected
  • Transfers to and from clients blocked/rejected, under penalty of asset freeze, without discussion, despite proven traceability of the origin of funds
  • Blocked transactions
  • Discouraged or prevented purchases of digital assets
  • Request for client release signatures

43% of business leaders say they have been personally impacted by their business, whether through account closures, loan refusals or a deterioration in the leader indicator issued by the Banque de France.

Respondents’ views on the nature of the difficulties faced by managers

  • Closing of accounts, including within the whole household
  • Banque de France rating downgraded
  • Refusal of a contribution from the sale of digital assets as part of an application for personal funding
  • Loan renegotiation

At the root of the difficulties experienced by the actors is a deficit in terms of understanding the sector

The difficulties experienced in the relationship between stakeholders and their financial institutions can be explained by two main reasons that stand out in particular in the responses to the survey: 

  • Poor understanding of the digital asset business and sector by these institutions (68%), which is consistent with their poor understanding of the NSP regime that 36% of respondents also point to; and
  • Fear of the sanctions that institutions could receive by working with stakeholders (61%), echoing their poor knowledge of AML/CFT practices that 21.5% of participants noted.

However, less legitimate reasons are also noted by more than a third of respondents, who feel that they are seen by financial institutions as a competitive threat and who cite their bad faith as a means of ultimately deterring players from taking action.

Deleterious consequences for French industry

La présente situation met en péril le développement de l’industrie française et pourrait conduire, à un horizon relativement court, les acteurs à s’établir à l’étranger. 

A competitive risk for the players

85.7% of respondents (24) believe that the current situation between digital asset players and financial institutions undermines the free competition (or market access) of players. 6 respondents (21.5%) also believe that the fees charged by their bank are discriminatory compared to players engaged in other activities.

Respondents’ testimonies

  • Payment card collection fees are at least 5 times higher than for traditional retailers, and 10 times higher for ancillary costs (disputes, correspondence, account closure).
  • Transfers outside the EU must be made manually, without the possibility of opening an international account, generating significant costs (particularly for exchange).
  • Minimum fee imposed by the bank of €2000 per month.
  • Application of a commission on each flow.

In its response to the Competition Authority’s sector enquiry in June 2020, Adan had already warned about the competitive situation in the industry.

A lack of support from the industry that hinders their development

Half of the respondents (50%) indicate that the state of their banking relationships has prevented them from obtaining credit or bank financing, while 5 have been refused EMP specifically because of their digital asset activity. Adan’s survey on the state of the crypto-blockchain industry during the COVID-19 crisis, launched in spring 2020, had already established this second finding.

Half of the respondents (50%) indicate that the state of their banking relationships has prevented them from obtaining credit or bank financing, while 5 have been refused EMP specifically because of their digital asset activity. Adan’s survey on the state of the crypto-blockchain industry during the COVID-19 crisis, launched in spring 2020, had already established this second finding.

The talent drain

Thus, for nearly a quarter of respondents (6), the state of relations with financial institutions in France is “very definitely” leading them to consider moving their business. It is an “option” for 12 respondents (about 43%). Only 8 respondents say they are ‘probably’ not going to move their business and 2 have no plans to do so.

Conclusion et recommandations des acteurs 

Digital assets and blockchain technologies offer very promising prospects, particularly in the area of payments and so-called decentralised or open finance, which should be encouraged to improve efficiency and accessibility. These activities, which are in direct competition with the current offer of the banking and financial sector, must not be paralysed by the current stalemate. 

Respondents to the Adan survey thus propose several actions that could be taken jointly by the financial/banking and crypto-blockchain industries in order to resolve these pitfalls.

Increase the visibility of successful French projects, with a view to improving the image of the sector.

Carry out educational actions aimed at financial institutions, on digital assets, their opportunities, as well as the regulation and taxation of these activities; and demystify preconceived ideas (LCB-FT, crypto players are banks, etc.). These actions could take the form of professional communications (letter from the ACPR or Tracfin for example) and positive communication from the authorities and the government on a sector with high potential. Ultimately, encourage dialogue and understanding of the opportunities open to the banking and financial sector, and how it could work with the crypto industry.

Target specific educational actions at the level of banks’ compliance departments, to enable them to better understand the proper compliance of crypto actors with their AML/CFT obligations. For example, share and explain elements of the systems put in place by crypto-blockchain players. Thus, develop specific and non-discriminatory onboarding procedures.

Apply the right of access to the account under reasonable conditions (especially in terms of fees).

Effectively apply the sanctions foreseen for the most serious cases (unjustified account closure, obstruction of the right to an account procedure, refusal despite registration as a NSP, etc.).

Create specialised innovation and crypto branches in each major bank: while smaller branches may suffer from a lack of knowledge of the subject, crypto players should be able to find qualified contacts at the business centre level.

Whitelist client transactions from or to digital asset players registered with the regulatory authorities; encourage a change in the ACPR’s position: do not systematically push players towards PSP status, but accompany them towards adequate supervision and enhanced account access procedures.