Even though cryptocurrency-related businesses are booming over the last few years, and prices of bitcoin, ethereum, ripple, and other cryptocurrencies are at their all-time highs. The problem for companies dealing with cryptocurrencies to open or maintain their current bank accounts still exists.
This problem is faced by companies working directly with cryptocurrencies and digital assets and by any
business that receives money into their account after selling their crypto assets (for example, accepted
as payment for services).
However, this problem is most severe for cryptocurrency exchanges and brokerages that are dealing directly with buying and selling cryptocurrencies and possess real operational risks for financial institutions, as well as crypto businesses, such as development, marketing, SEO, or affiliate programs.
This problem's leading cause is that cryptocurrency businesses are classified among high-risk activities in regulation and banks' internal policies. Therefore, many high street banks see it outside of their risk appetite and do not allow any activity related to virtual currencies in accounts opened within them.
While some banks do work with crypto-related businesses, they tend to cherry-pick their clients by only working with easy-to-understand business models and well-established companies.
So the issue gets even more complicated for more innovative business models, such as mining, staking, nodes development, arbitrage trading, crypto trading signals, or portfolio management. These companies are usually rejected by financial institutions which publicly present themselves as crypto-friendly ones. Also, if required services are not limited to a payment account, it gets even more complicated. Solutions for crypto businesses looking to offer various financial services to their clients, such as issuing debit cards or virtual IBANs, are rare, so are the chances to obtain these services.
Another discriminated group is newly established cryptocurrency businesses. Some financial institutions require a track record (for example, a credit card processing history) to consider opening an account for a company. Sometimes, entrepreneurs face a chicken and egg problem when trying to open an account for their blockchain business.
So how to open a bank account for a crypto-related business?
The first step is to find a crypto-friendly bank or financial institution (payment service provider, electronic
money institution etc.).
To avoid wasting time and money, it is essential to understand the scale of their “crypto-friendliness”:
“Do they allow to receive and send money between the account and cryptocurrency exchanges?”
“Do they allow you to use the account to conduct crypto-related business?” and most importantly “do they serve companies with my business's model?”.
Only when you identify that this bank is working with your business model, you should consider applying. Otherwise, it can result in weeks or months waiting for a rejection instead of spending this time scaling up your business.
Secondly, it is crucial to understand if the financial institution is offering a full range of required services:
- “Are they offering international payments via SWIFT?”
- “Do they offer debit cards?”, “Do they have an API?”
- “Do they offer card issuing or virtual IBANs?”
It is important because while the number of financial institutions servicing crypto businesses is rising, not all of them offer the full range of services required by the business. A large fraction of them only offers a payment account within SEPA (Single Euro Payments
Area), while businesses usually need the minimum package: SWIFT payments, multicurrency accounts, and payment cards.
The third and most crucial step is the correct approach to the financial institution.
When applying, you should provide all essential information in a well-organized way to decide to onboard you as easily as
possible for the financial institution you are applying to. That includes having all corporate documents up to date and providing a brief description of your business model. It will help if you include relevant examples such as your competitors. If our business is regulated, you should attach evidence of having a license.
Or, if you are obliged to have anti-money laundering procedures in place, you should include your internal procedures, samples of your due diligence, and possible external audit results. The more complete your application is, the higher chances to have an account opened, and it would take less time.
Are there any recommendations?
Yes. One of the places you should check if you are looking for an account for a crypto business is Bankera.
It is one of the few financial institutions offering a wide range of financial products for crypto-related companies.
Firstly, it does support a wide spectrum of business models, including cryptocurrency exchanges, miners, staking service providers, arbitrage traders, and digital businesses such as affiliates, SEO services, IT development, and others. Furthermore, it is willing to go the extra mile and understand new business models.
Secondly, Bankera offers several different payment options: bank wires via SEPA and SWIFT networks, multicurrency local payments, Visa business physical and virtual debit cards, credit and debit card payment processing.
Also, Bankera Visa business cards have high limits, so they are handy for paying for various business-related expenses, such as marketing, hosting services, etc.
Thirdly, its offering goes beyond traditional payment services. It also enables digital businesses to issue Visa debit cards (both physical and virtual) or issue virtual IBANs to their clients. Also, it has a white-label solution and various APIs for different integrations of Bankera services to your business to improve user payment experience or to be able to upsell your clients with financial services.
Furthermore, it also opens personal accounts with dedicated IBANs and Visa cards, so you can open an account for yourself to receive dividends or your employees to receive salaries. Also, it is a good choice for a personal account on its own if you are looking for an account to receive money from cryptocurrency businesses.