Adam Tracy on Cryptocurrency Banking & the White v. Square Case

Cryptocurrency attorney Adam S. Tracy explains the difficulties of cryptocurrency banking and the potential impact of the White v. Square legal case on availability of banking for crypto companies.

So I have like a thought — really more than a statement. There’s a case that’s emanating out of California. And it’s now in the Appellate Court for the knife district and it’s White v. Square, and Square being the payment processor. It’s worth a look, and I think it has implications to crypto amongst other areas.

And so the basis of the argument is that White is a bankruptcy attorney in California sought to use Square as his payment processor, and was denied on the basis that he was a bankruptcy attorney and there was a series of related things in there that basically say Square wouldn’t take you because he’s involved as a bankruptcy attorney. And, I’ve looked at the terms and conditions for Square and other payment processors, and amongst the other things that are in there are like gambling, adult, and cryptocurrency.

And so he sued under these California State Civil Rights Act on the basis that he was discriminated against in a business relationship because he was denied service based on what he did. And so, you know, it begs a good question, and it’s still kind of going through the courts, but you know, the question becomes crypto banking, right? Like I get so many questions on crypto payment processing. I get so many inquiries. Where do I Bank? Where do I Bank? Where do I bank? And their solutions for that, right? There are banks that will accept cryptocurrency. I could name a number of them right and feel free to contact me if you need a good referral.

Some banks, you know, are offshore. Some banks are smaller community type banks or state-chartered banks that you may not have heard of. Some are major national banks, right? Some banks will require (and I encourage you to ask your local bank if you’re looking for like local real bank representation) is that, you know, the bank account must be either protected with like a bond or with a deposit of like an equal amount. Right?

So if you have a bank account of a million dollars in your operating account, then you’d have to have like a CD or something like that with the similar amount of money, which, you know, oftentimes you can find somebody to effectively lend you that money on that basis knowing that it’s secure, but it comes at a cost. But, you know, something to really consider and I’m kind of throwing us out there in the event somebody wants to maybe explore it with me as an attorney — are we being discriminated against because we’re sitting here saying that we’re running a legitimate business?

And, you know, each state and of course the federal government has their own civil rights laws, and you read about these scenarios all the time where people are denied service based on race, sexual orientation, religion. You name it. Well, why should we be discriminated against based on what we do? Right? And that’s a real thing. That’s what the White v. Square is all about. And I think the outcome of that, which appears at this point at least two favor White, in this case, which is pretty significant and may have fairly significant ramifications.

So my question to, you know, the crypto world out there and to the lesser extent my clients in the adult space, and the payment processing space, the MCA space, you know, I guess I tend to hit sort of the unfriendly bankable communities out there. But you know, have you applied for a bank account and been turned down solely because you’re engaged in crypto currency? And is that a violation of your State Civil Rights Act? I think it may be, right? I think it may be. And the reality is, you know, offshore accounts are great, but they come with a great deal of risk.

They come with some reporting nightmares for taxes, and it’s not an ideal situation. If you could bank at Bank of America, you’d bank at Bank of America because Bank of America arguably isn’t going anywhere. Right? You know, so it puts the development of blockchain, forget cryptocurrency, just the whole block chain industry, which gets obviously gets connected with cryptocurrency, in Jeopardy because you can’t access the good banking. Same with the Cannabis industry.

So it’s an odd thing. And this just relates not only to cryptocurrency, but like in the White case with payment processing. So if there’s anybody out there, right, cryptocurrency payment processing, adult, cannabis, MCA, gambling, you name it, who you know has run into problems trying to get banking relationships, you know, when you’re relatively low risk, but they just typically don’t like what you deal in — give me a call. Let’s explore.

Let’s see if there’s something that we can collaboratively work on to check this out. Email me — Also if you have a need for crypto banking, I have a few solid leads that I’m happy to make the introduction to. Check me out and my website — Hit me up there. Again my email, and I’ll be happy to help out. Right. Cheers.

A former competitive rugby player, serial entrepreneur and, trader attorney, Adam S. Tracy offers over 17 years of progressive legal and compliance experience in the areas of corporate, commodities, cryptocurrency, litigation, payments and securities law. Adam’s experience ranges from commodities trader for oil giant BP, initial public offerings, M&A, to initial coin offerings, having represented both startups to NASDAQ-listed entities. As an early Bitcoin adapter, Adam has promoted growth of cryptocurrency and offers a unique approach to representing crypto-clients. Based in Chicago, IL, Adam graduated from the University of Notre Dame with dual degrees in Finance and Computer Applications and would later obtain his J.D. and M.B.A. from DePaul University. Adam lives outside Chicago with his six animals, which is illegal where he lives.

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Originally published at on September 22, 2018.



Adam Tracy Risk Management & Consultant Wheaton

Adam Tracy brings over twenty years experience as a growth hacker, risk management attorney, startup consultant and dealmaker.