Banks Saying No to Crypto Businesses: What Then?

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Businesses dealing with digital assets often face significant challenges with set up and operations. Establishing a bank account can be an insurmountable obstacle.

However, the situation is slowly changing. Last year, Malta passed into law three bills related to blockchain technology. More recently, France passed the PACTE law which provides clear regulatory guidelines for businesses operating with digital assets and those raising funds via public token offerings.

The Ministry of Finance of Lithuania has also published comprehensive guidelines for cryptocurrency and initial coin offerings (ICOs), covering four major areas from accounting to taxation.

Regulations such as these will make it easier for digital asset businesses to find banks which are willing to provide their services. However, the rate at which regulation is coming into place is still lagging behind the widespread propagation of businesses dealing with digital assets.

Assessing the Alternatives

So far, there have been a number of alternatives which crypto businesses have used to circumvent this problem. These have ranged from making use of more boutique services to being willing to forgo fiat currency completely.

Companies such as ConnectPay, MisterTango, and SendFriend are services which have been willing to accept accounts for businesses dealing with digital assets. There are also a number of smaller banks which have been willing to take on these businesses such as Silvergate Bank in San Diego who reported to Bloomberg that digital asset businesses have as much as $40 billion to deposit.

Other businesses including Binance have forgone having a bank account completely. 90% of Binance employees have been reported to be paid their salaries in the exchange’s native token BNB.

Solutions to consider

For many, completely forgoing a bank account and operating the business entirely with cryptocurrencies is not an option. You can consider the services mentioned above.

The plus side here is that these waters are tried and tested so we can learn from the lessons of others. Here are several steps you can take to smooth the process of opening a bank account for your crypto business.

Find crypto-friendly regions.

If you are free to move to a new jurisdiction to open your account, pick a region which is particularly open to crypto businesses. Regions such as Malta, Lithuania, and Switzerland are known for being open to crypto businesses and for facilitating the opening of bank accounts. Other countries such as France and Germany are also quite friendly towards crypto businesses. However, other difficulties can be faced when opening a bank accounts in these countries.

Leverage local connections and resources. 

It’s a good idea to connect with crypto businesses in the region you operate in to find out what they have done to open a bank account. It is also a good idea to have the key people for your business based in the area where you want to open a bank account. This is often a requirement of banks but will serve to make the bank feel more comfortable with the idea of opening the account even if it is not a requirement.

Cooperate with the bank.

Lastly, it is a good idea to show up to the bank in person as opposed to just emailing them and provide them with any documents they may need. Banks have stringent KYC and AML policies to comply with and it is natural that they will request a lot of information before being able to open a business bank account. Cooperate with a smile every step of the way and you will drastically increase the chances that the bank will open an account for your crypto business.

Gintautas Scerbavicius
@linkedin

HODL Finance is the European digital lending company. HODL Finance issues loans backed by cryptocurrency and other digital assets. Founded by the shareholders of the peer-to-peer lending platform Savy, HODL Finance now serves clients around the world.