FTX’s collapse in late 2022 triggered an institutional retreat from cryptocurrency partnerships. Banks and financial firms that had been exploring digital asset offerings suddenly pulled back, fearing regulatory backlash and reputational damage.
For Coinme, a cryptocurrency exchange operating since 2014, this industry-wide trust crisis presented significant challenges. Yet through careful positioning, the company has continued attracting institutional partners amid heightened scrutiny.
The Great Withdrawal
Before FTX’s downfall, financial institutions showed growing interest in cryptocurrency services. “In the previous 2001 bull market cycle, we were talking to a lot of banks who wanted to offer digital currency services,” recalls Coinme CEO Neil Bergquist.
These promising conversations vanished after FTX imploded. “Those partnerships quickly evaporated after the FTX fiasco and banks were like, ‘Got to stay away,'” Bergquist explained. Regulatory pressures intensified this retreat, with “the Treasury and OFAC and FinCEN… putting a lot of pressure on banks to not have any exposure to digital currency.”
Compliance as Strategy
Rather than pivoting away from institutions, Coinme doubled down on regulatory compliance as its core differentiator. The company operates with money transmitter licenses across the US.
“Coinme is a licensed and regulated financial institution, just like the other financial institutions you know and trust. We do KYC. We do anti-money laundering, so we have controls and transaction monitoring in place. We do blockchain monitoring,” explains Bergquist.
This approach predates current scrutiny. “Coinme has always prioritized regulatory compliance – we’ve never believed in the ethos of tech companies like Facebook and Uber, which is to break things and fix them later. From day one, we’ve worked with regulators,” Bergquist asserts.
In 2022, Coinme strengthened its compliance team by “hiring a new chief compliance officer from a major U.S. crypto exchange” and adding its “first legal counsel with deep financial regulatory experience.”
Enduring Partnerships
Despite the broader institutional retreat, Coinme maintained key relationships. MoneyGram not only continued working with Coinme but took a 4% ownership stake in January 2022 and later selected “Coinme to power its mobile-based crypto offering.”
The partnership with Coinstar has similarly endured, enabling cryptocurrency purchases at over 6,000 kiosks reaching 90% of Americans.
Adapting the Message
Coinme has adjusted its institutional pitch, emphasizing practical utility over speculation. The company highlights demographics showing 28% of investors aged 21-43 see greater growth potential in crypto, versus just 4% of those 44+.
Bergquist also notes that “22% use cryptocurrency for everyday transactions, including online purchases and remittances,” positioning crypto as a functional tool rather than merely a speculative asset.
Building Trust
Beyond compliance, Coinme builds institutional trust through several strategies:
- Longevity: Operating since 2014 through multiple market cycles, recently celebrating its 10th anniversary and $1 billion in sales
- Physical presence: “We establish trust through the physical presence of a kiosk,” explains Bergquist. “We literally had customers back then say, ‘Well, I know you’re not going to steal my money, because then I’m going to steal your machine'”
- Conservative approach: Instead of listing hundreds of speculative tokens, Coinme focuses primarily on established cryptocurrencies like Bitcoin and Ethereum
As regulatory clarity improves, including the SEC’s approval of Bitcoin ETFs in January 2024, Coinme appears positioned to expand its institutional partnerships by offering a middle path—allowing financial institutions to meet customer demand while managing risk through established, compliant partners.
