Quontic Bank, a small financial institution based in New York City, is seeking to position itself as a crypto-friendly bank.
In recent weeks, Quontic opened a checking account for a cryptocurrency ATM company. Steven Schnall, the chief executive officer of Quontic bank, has also indicated that the bank is currently in negotiations with to provide financial services to another cryptocurrency startup. Shnall did not name the companies that it has moved to partner with, however, stated that its pending negotiations are with a client that “could impact millions of Americans.”
Regarding the company’s decision to partner with crypto companies despite the stringent know-your-customer and anti-money laundering (AML) regulations tied to the industry, Shnall stated:
We’re just taking steps so that when the regulatory environment becomes more crypto-friendly, we don’t have a lot of catching up to do. We’re looking to diversify our product offering and our customer mix by entering into that field.
“There must also be a strong strategic motivation for us as well - such as meaningful deposit balances,” Shnall added.
Banks Face Stringent Regulatory Obligations Servicing Crypto Companies
When first approached by the ATM network that recently partnered with Quontic, Shnall recounts the company having no disaster recovery plan and failing to properly track its currency transaction reports. The formal establishment of the partnership followed approximately one year of working together closely to ensure regulatory compliance.
Shnall emphasized the necessity for virtual currency businesses to ensure diligence in meeting the requirements of regulators, stating:
“You don’t have mom-and-pop financial institutions. You’re not going to have mom-and-pop crypto players of any significance. Crypto companies have to have strong controls, internal audit, and a very robust system of compliance.”
Quontic Distributes $20 Worth of BTC to Staff Members
In an interview, Shnall recounted first becoming interested in cryptocurrency when bitcoin was priced below $1, before later purchasing his first BTC for $75 in 2012. However, Shnall went on to lose 500 BTC in the collapse of Mt Gox.
Patrick Sells, Quontic Bank’s chief innovation officer, learned about BTC from Shnall while working as Quontic’s mortgage lead generation. During January 2018, Shnall and Sells built an ETH mining rig. According to CoinDesk, the pair lined up $2.5 million in funding for an initial coin offering (ICO) to launch an altcoin called QCoin, however, canceled the offering after the markets plummeted last year.
To educate its employees regarding cryptocurrency, Quontic recently gave each member of its staff $20 worth of BTC while prices were below $4,000. The bank is actively seeking to hire employees experienced with cryptocurrency, with Sells stating:
We can teach them the banking side. It’s easier to do that than vice versa.
Quontic currently manages $420 million worth of assets, equating to approximately 0.015 percent of JPMorgan’s roughly $2.6 trillion in assets.