The newly-launched, crypto-friendly, and historically-associated ‘Medici Bank’ is about to take on its first crypto clients, becoming the latest financial institution to address the desperate need for banking services in the cryptocurrency industry.
According to a report from CoinDesk, the bank will launch private beta testing of its digital onboarding process, web portals, and application programming interface with five international companies in October: according to CEO Ed Boyle, two or three of those companies will be crypto businesses, and at least one of them is a cryptocurrency exchange.
Boyle said that the bank opted to test its ability to serve clients in the cryptocurrency industry first in order to see if the banks’ infrastructure could accommodate high trade volumes. “Crypto companies are high-throughput types of clients,” Ed Boyle told CoinDesk. “If we can handle that, we can handle anything.”
Medici Bank will go into open beta later this year and plans to launch in 2020 with the goal of $1 billion in combined assets under management (AUM) within the following three years.
Notably, the Puerto-Rico based, digital asset-focused financial institution was founded earlier this year by Prince Lorenzo de’ Medici, a direct descendant of same Medici family that ran a powerful banking empire in 15th-century Italy.
”We fully expect our plans to adjust greatly after we get to market.”
Boyle said the bank’s goal is ultimately to have a pool of clientele split evenly between the fintech sector (including crypto), private wealth clients, and import-export companies; the bank is willing to have crypto businesses make up no more than two-thirds of its clientele.
However, “[we] don’t know when we’ll achieve something that looks like parity,” Boyle said to CoinDesk, adding a boxing-related metaphor: just as fighters have a plan until they get punched in the mouth and no battle plan survives first contact with the enemy, we fully expect our plans to adjust greatly after we get to market.”
Ed Boyle, CEO of Medici Bank
Plans for data analysis, decentralization
Boyle also revealed that the bank is currently exploring relationships with third-party companies that would grant it with the ability to analyze Blockchain data: “it’s a heck of a lot easier to analyze a blockchain than it is to analyze a paycheck,” he explained. “In banking crypto-related companies, we don’t have to make assumptions, we just figure out what the wallet address is and analyze the history of that wallet address.”
Eventually, Boyle hopes that the bank can start the movement toward a global system of decentralized banking. According to CoinDesk, he is “in talks with digital banks around the globe about creating a network with multiple interoperable blockchains to facilitate instant sharing of know-your-customer information, identity transportability, real-time cross border Payments and account transfers.”
Boyle criticized what he sees as the modus operandi for traditional, centralized banks: “banks like to put up walled gardens and make it difficult for you to take your money elsewhere, we want to make it very easy for you to send your money elsewhere, whether it’s from one place to another or from one bank to another.”
A lack of banking services in the crypto industry could be a boon for banks that are willing to make the leap
No matter how many crypto-related clients Medici decides to accept, there will likely be crypto businesses lining up around the block for the chance at working with a US-registered bank.
When Finance Magnates asked Patrick Sells, CIO of Quontic (a crypto-friendly bank based in New York), if his bank frequently gets inquiries from crypto companies hoping to become clients, he replied: “yes, MANY.”
As such, the glut of companies looking for a bank has created a golden opportunity for those that can be first to the post: “Big banks and small banks are often slow to get into newer markets given the regulatory limitations and obligations associated with new markets,” Sells told Finance Magnates. “This is an area we felt that we could build expertise in and that would help provide us with a competitive advantage.”
