Digital Banking Startup Targets UK License to Serve Crypto Firms

A London-based startup says it wants to become the "first digital assets merchant bank" in the U.K.

According to its website, DAG Global aims to "deliver next-generation merchant banking solutions to the underserved fintech, digital and SME sector." That is, however, once it has received a banking license in the nation.

DAG has already had one go at winning the license. While its 2018 application wasn't successful, it has since had “constructive dialogue” with British financial watchdogs, the Prudential Regulation Authority and the Financial Conduct Authority, according to a Monday report from the Financial Times.

It now plans to resubmit the application next month with a view to offering bank accounts to crypto firms from next year.

The U.K. banking sector has been notoriously averse to serving firms in the industry such as cryptocurrency exchanges. In the earlier days of crypto, U.K.-based exchange clients were forced to use SEPA banking transfers via European banks to fund their accounts. And though that situation has eased slightly , even prominent and established firms like Coinbase have still had problems, with Barclays pulling support last year.

Businesses in the U.K. industry are "fed up with what they’re faced with to meet basic business banking needs at the moment," DAG Chief Commercial Officer Stephanie Ramezan told the FT.

As such, DAG hopes to improve the situation and join the very small number of financial institutions, such as Clearbank and its partner BCB Group, officially licensed – and willing – to serve the local crypto space.

“It’s a lack of understanding and reputation risk that has kept others away. We think it can be a cleaner sector" than traditional finance, CEO Sean Kiernan said in the report.

This time around, Kiernan appears hopeful the regulators will pass the application, saying they've raised no "red flags" during discussions.