Relationship building is a hedge against debanking — OKX exec

Developing relationships with banks and other financial institutions is considered a critical move for crypto businesses, as it serves as a defense against debanking. This is according to the head of business development at OKX, Lenhard Boenigk. Boenigk suggests that the risk of debanking for a crypto business can be significantly reduced through the creation and maintenance of strong relationships with financial institutions.

Debanking refers to the denial of banking services to a business or individual. In the cryptocurrency sector, debanking is a common issue due to the perceived risks and regulatory uncertainty associated with digital currencies. It's a significant problem that can limit the growth and operational abilities of businesses within the industry.

Boenigk emphasizes the importance of having a diversified range of banking relationships. This not only provides a safety net for businesses in case of debanking but also facilitates the smooth operation of business activities. The development of relationships with banks also serves as a form of validation for crypto businesses, as it demonstrates the legitimacy and reliability of their operations.

According to Boenigk, one of the key strategies to prevent debanking is to maintain a high level of transparency with banks. This involves regular updates on business operations, compliance measures, and any changes that may impact the business relationship. Moreover, it is crucial for crypto businesses to understand the compliance requirements and regulatory frameworks of the jurisdictions in which they operate.

While the crypto sector continues to face challenges in terms of banking relationships, there are signs of positive change. Increasingly, traditional financial institutions are recognizing the potential of digital currencies and blockchain technology. This recognition, along with the ongoing development of regulatory frameworks for the crypto industry, is expected to improve the sector's relationship with the banking world.

Overall, the ability of crypto businesses to establish and maintain strong banking relationships is a crucial factor in their success. It not only protects them from the risk of debanking but also significantly enhances their operational capabilities and credibility in the market.