s Defi tokens go crazy and neo banks begin moves towards crypto, under the watchful eye of Regulators, the bank Cashaa has announced a $5m raise for expansion into India, while quietly noting that a massive $3m of said raise will go to pay off a hack of their OTC operations in July 2020.

Cashaa have been making bullish claims recently, through various ambassadors, about their impending payments licence from the FCA in the UK, with no real evidence to suggest this will ever happen. Why may they struggle to be a licensed crypto friendly bank?

Why Cashaa may not get FCA license

Currently Cashaa are using the licenses of 3rd parties to enable them to facilitate the various services they offer, this from a firm who raised $33m from investors in 2017. This means they're currently not a bank, SPI or EMI, but a middle man for the providers they already use.

They claim to be generating user data so valuable to the FCA that a license is all but guaranteed, but not all is well.

Retail user accounts + bitcoin wallet

Firstly, the FCA really do not like the use of user bank accounts alongside cryptocurrencies. In fact, even Revolut, a $multi-billion institution is falling foul of combining crypto and bank accounts when it comes to the FCA. Cashaa offer all things crypto and fiat accounts to retail users from around the world. Will the FCA really like this approach from an ICO, which has seemingly spent $33m prior to this most recent raise?

We asked the CEO of challenger bank Xace, David Hodkinson, what this means for Cashaa: 'Securing a payments license from the FCA, be that a Small Payment Institution like we have or an Electronic Money Institution such as Revolut has, is no mean feat and one that really has to be earned. We've heard quite a lot of chatter around Cashaa and an FCA license but this would seemingly go against what the FCA really care about.'

'Retail accounts and bitcoin wallets under a single license is going to be extremely complicated for all involved, which is why it may not actually happen and it's something investors in their token should be wary of until the FCA issue a license, which would be amazing for the industry and a move we would welcome.'

Cashaa OTC Hack

Cashaa was hacked for $3m in July 2020. This will almost certainly be on the FCA's radar. Will they like it and license such an entity just a few months after a rather worrying and exceedingly large hack? Again, it seems unlikely.

Community pushing

There are signs that some from the Cashaa community are pushing confidence and insider knowledge of an impending FCA license approval. This may well be public knowledge with the FCA and is the sort of activity that will spook them, as it does most of us in the industry.

Cashaa may well provide a great service for what it does, but it may not be, or end up as, the fully licensed bank entity it is claiming to be.

Sep 2, 2020
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