The bank sent Bitcoin to employees and is now serving cryptocurrency companies.

A small bank in New York has begun to do business with cryptocurrency companies and has become a small group of US financial institutions willing to accept this field.

Quontic Bank opened a current account for a Bitcoin ATM a few weeks ago and is currently working on a contract to provide banking services to another cryptocurrency startup. The bank refused to disclose the information of these two customers.


Quintic CEO Steven Schnall acquired the bank in 2009. He says:

“We just took some measures in advance so that when the regulatory environment for cryptocurrencies improves, we will not keep up. We hope to diversify our product offerings and customer composition by entering this field.”

Although Schnall declined to disclose the size of Quontic's cryptocurrency business, he claimed that the unfinished contract "may affect millions of Americans."

There are not many banks that are crypto-friendly, in part because they must abide by the KYC and AML rules.

Joshua Klayman, head of the blockchain and digital assets business at Linklaters, said:

“Banks and other financial institutions must be aware of all suspicious activities. If a startup raises funds through ICO but does not make a reasonable KYC or AML, then the bank cannot understand the source of the revenue.”

In the United States, there are only a handful of banks willing to serve the cryptocurrency industry, with Silvergate in California, Signature in New York, and Metropolitan Commercial being one of the few banks.

Like these institutions, Quontic is just a "little person" in the banking industry. Its assets are 420 million US dollars, only equivalent to 0.015% of JP Morgan Chase.

However, Quontic stands out because its leaders have long noticed cryptocurrencies.

From learning bitcoin to sermon cryptocurrency

Schnall, who has long been involved in mortgage business, has become interested in Bitcoin when it is less than $1. In 2013, he bought his first bitcoin for $75 and lost 500 bitcoins for the bankruptcy of Mt Gox.

Patrick Sells, chief innovation officer at Quontic Bank, said that when they first met, Schnall began telling him about bitcoin, and Sells was working on a mortgage for Quontic through his company.

To learn more about the mechanism of cryptocurrency, Schnall and Sells established an Ethereum mining business independent of Quontic in January 2018. (Schnall said he is more optimistic about Bitcoin than other cryptocurrencies.)

They even plan to launch their own cryptocurrency QCoin, which is also operated independently. They originally planned to raise $2.5 million through the ICO, but canceled the plan after the market crashed.

Schnall and Sells were not intimidated by market ups and downs. They said they believe banks and cryptocurrencies can have a symbiotic relationship and are exploring what steps are needed to achieve this goal under the US regulatory framework.

When the price of Bitcoin was around $3,000, they gave 180 employees a bitcoin of $20 each to help them understand Bitcoin. They also want to hire employees with experience in cryptocurrency.

Sells said:

“We can start from the banking business to help them understand this knowledge, which is relatively simple.”

Quontic's high standards

Although the bank wants cryptocurrencies to know that their banking is completely open, Quontic says they have high standards for cryptocurrency customers.

A year ago, when a Bitcoin ATM network contacted Quontic, the company was not ready to accept the bank's compliance review.

The company does not have a disaster recovery plan, there is no transaction tracking report that can be submitted to the regulator, and the company's report does not meet Quontic's standards.

A year after working closely with the bank, the company opened an account in Quontic a few weeks ago.

In Schnall's view, this professionalism is necessary to make cryptocurrency startups take seriously.

“Financial institutions need to comply with a large number of rules, so non-standard cryptocurrency participants are not valued. Encrypted money companies must have strong controls, internal audits, and a very robust compliance system.”

In addition, the conditions required for Quontic to serve a cryptocurrency company are not limited to this.

Schnall said:

“For us, there must also be strong strategic motivations – such as having a 'a certain amount of deposits', etc. 'a certain amount' is relative to the complexity of the account, the risk burden and the intensity of the work.”