Surety bonds and cryptocurrencies generally do not mix well. With the current state of affairs in the cryptocurrency market, surety companies that have previously been crypto-friendly are canceling bonds. Some of these surety companies are refusing to do business with any company related to crypto. It does not come as a surprise given what is happening, such as all of the fraud, liquidation of exchanges, and bankruptcy filings.
Cryptocurrency companies generally need surety bonds for different license requirements. These bonds could be required by departments of financial services, money transmission regulators, and other entities that grant licenses. These bonds are required by their licenses and need them to stay within compliance of their legal requirements for their licenses.
A lot of those surety companies are no longer interested in that market space. They are canceling their bonds, pulling out of the market, and leaving clients in a crisis. Your broker needs to come up with solutions to avoid these crises. You may be working with somebody ill-equipped to come up with a solution, such as finding a market that’s willing to take on the risk, issue the bonds, or stay in place.
Crypto companies that need bonding have focused on price for a long time and saved a few dollars in the short run. Now that there is a crisis such as the one we’re dealing with currently, your surety partner may not be willing, or able, to be your partner for the long term. So, if you’ve had an easy avenue to obtain a bond over the past several years, and that’s no longer available, it’s time to look to a seasoned surety professional to guide you through this crisis.
I tell clients that price is not always the most important thing. Having a long-term partner committed to your business, your continued growth, and your ability to operate and obtain proper insurance and surety bonds, can keep your business operating smoothly.
What I would suggest is to give me a call, and let’s start a conversation to come up with either a replacement bonding line or discuss different forms of collateral. Your options may be less than optimal, but generally we can find the best solution out of those hard to swallow and difficult options.
Neil Pedersen
PEDERSEN & SONS SURETY BOND AGENCY, INC.
15 Maiden Lane Suite #800
New York, NY, 10038
212-227-7277
800-720-7277
neil@courtbondnow.com
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