How to open a bank account for cryptocurrency projects?

Since 2017, when the cost of 1 Bitcoin was $20,000, cryptocurrency companies began to appear like mushrooms after the rain. But a complication in the development of cryptocurrency funds, exchangers, exchanges, ICOs and blockchain projects is: firstly, the need to obtain a license, and secondly, the problem of opening and maintaining a bank account. Moreover, the second point is a much more serious obstacle than the first.

 

Opening an account for a crypto company is a complex task and requires special knowledge. But solutions can be found, as the financial services market is sometimes willing to cooperate in connection with the opening of new avenues for profit. For the Lawrange law firm, opening bank accounts for international business is one of the main areas of specialization. Our team can also be useful for high-risk businesses, including cryptocurrency companies.

 

 

Basic information on opening accounts for a crypto business

If the activity of a legal entity is related to cryptocurrency, banking institutions will identify such a company as a “high-risk client”. In 2021, the Basel Committee on Banking Supervision, one of the most authoritative financial regulators in the European Union, proposed introducing a risk factor of 1250% for cryptocurrencies. If there are crypto-assets, the bank must keep fiat currency in reserve at the rate of 1:12.5 relative to the value of these assets.

 

Representatives of banks are categorical when it comes to cryptocurrency. More than 95% of banks refuse to open an account for crypto companies immediately and without talking. The number of traditional banks willing to cooperate with the cryptocurrency business is limited.

 

For the information! Even in the case of rare luck with opening an account, this does not always become a reliable basis for stable daily work. The Bank can close or freeze the current account at any time. Therefore, it is important to check the reputation of the bank before starting cooperation. Alternatively, you can use the option of opening an account in the payment system.

 

 

Why do banks refuse to work with crypto projects?

  1. Financial institutions are unwilling to spend time studying and properly understanding the nature of cryptocurrency-related transactions. The bankers have no understanding of the nature of such operations.
  2. The instability of the non-fiat currency, difficult to predict fluctuations in the exchange rate make the risk of reducing the profits received earlier to zero at any time extremely high.
  3. The lack of regulation at the legislative level of cryptocurrency activities attracts scammers to this area who seek to launder money obtained illegally. When a crime is committed, the bank suffers reputational damage, regardless of whether the client in this case is the lawbreaker or the victim.
  4. The governments of a number of jurisdictions are trying to regulate the cryptocurrency market. It is difficult to predict what consequences such steps will entail.
  5. The influence of cryptocurrencies on the economy of individual states and on the world economy has not yet been studied enough. Governments have not fully decided how to benefit from cryptocurrency transactions, so for the time being they are trying to discourage them.

 

 

Features of opening bank account for a crypto project

To open an account, crypto companies need to prepare for serious checks within the framework of AML and KYC procedures. Banking structures and payment systems, going for cooperation, are trying to avoid possible sanctions, since cryptocurrency activities are traditionally associated with money laundering.

 

Crypto companies are required for:

  • a license from a prestigious jurisdiction (the best option is a license issued in the EU);
  • availability of reliable algorithms for checking customers;
  • owners or managers have business experience in this area;
  • providing a package of documentation, both for the company and for the beneficiaries;
  • sometimes – making a deposit and maintaining a minimum balance on the account.

 

***Note: EU licenses are governed by the relevant EU Directives, so they are similar. The broadest among them is the Electronic Money Institution (EMI). However, in order to get it, a crypto company must have an authorized capital of at least EUR 350,000. The cost of simpler licenses is from EUR 10,000.

 

Important! The process of opening an account in such cases can take from 6 months to one year. Tariffs will be higher than when opening corporate accounts for other companies.

 

Lawrange law firm’s team selects personal solutions for each client. Universal options in connection with the circumstances indicated above are not acceptable. When choosing a bank or payment system for opening an account, the following is taken into account:

  • the jurisdiction in which the business is registered;
  • location of the majority of clients (target audience) and other contractors;
  • monthly and annual turnover;
  • allowable account maintenance costs.

 

Based on our practice, it becomes clear that a solution that suits one client may turn out to be unprofitable and inconvenient for another. We are ready to analyze your business profile in order to suggest options that reduce risks and promote benefits in a particular case.

 

Among the jurisdictions with which Lawrange law firm works, is:

  • Singapore;
  • Czech Republic;
  • Cyprus;
  • Latvia;
  • Macedonia;
  • Kazakhstan;
  • Dominica;
  • Nevis;
  • Seychelles.

 

***Notice: This list is constantly updated. It cannot be considered exhaustive, since we are constantly and purposefully looking for profitable offers from banks and payment systems for crypto projects.

 

For detailed information, leave a request through the feedback form on our website, or order a personal consultation.

 

Is it possible to open an account remotely? Yes.

Where can I open an account for a cryptocurrency startup? In the payment system.

Can you help open a bitcoin account in the SEPA zone? Yes. 

 

 

How to open an offshore bank account for cryptocurrency companies?

An offshore account for a crypto project is a convenient and popular solution. We are talking about such jurisdictions as Dominica (in particular, Migom Bank), Nevis and the Seychelles. These jurisdictions are distinguished by loyalty to the cryptocurrency in general, and the development of projects using it. In particular, in 2019, the Seychelles took the position of the world center of crypto exchanges. Over the course of the year, $36 billion worth of cryptocurrency transactions passed through the Seychelles.

 

For the information! The conditions for opening an account may include making the first deposit in fiat currency. Transactions necessary for doing business are carried out through the SWIFT transfer system. Banks have a wide network of correspondent accounts for prompt transfers. Clients are given the opportunity to receive a personal IBAN. Internet banking has been established in banking institutions. In addition to conducting traditional financial transactions, bank customers are encouraged to buy or store bitcoin in their accounts.

 

In jurisdictions such as Dominica, Nevis and the Seychelles, it is allowed to open an account remotely. The customer verification process is fast. For example, Migom Bank (Dominica) uses its own compliance department in Europe for this purpose.

 

The package of documents for opening an account for a crypto project in banks in Dominica, Nevis and Seychelles includes:

  • scanned copies of personal documents of owners and directors (notarized);
  • CV of the company owner;
  • proof of place of residence (the best option is utility bills) not older than three months;
  • a set of constituent documents for the company;
  • letters of recommendation, including those from a certified auditor;
  • description of the company’s activities;
  • financial statements for the previous year.

 

***Note 1: Depending on the jurisdiction, documents are accepted in English or Spanish.

 

***Note 2: Situationally, in the course of compliance, the bank may request additional documents.

 

 

How to open a merchant account for cryptocurrency companies?

To ensure the successful conduct of a cryptocurrency business, it is necessary to take care of the account to which customer payments will be received – a merchant account (payment processing). This tool allows you to accept funds (in particular, cryptocurrency) directly on the site from different letters of credit. At the same time, user payment data is requested not on the site, but on the secure pages of the processing center.

 

For the information! Merchant account is a code for identification in the payment system. Having such a trading account provides a cryptocompany with a number of advantages:

high speed of settlements – a thousand or more operations per minute;

  • the ability to make payments at any time of the day or night – the processing service works around the clock, including weekends and holidays;
  • creating conditions for scaling the project, expanding the number of clients.

 

To open a merchant account, you need to submit an application to the acquirer – to the bank or to the payment system, where payment processing services are provided. Since we are talking about a crypto project, you need to understand that it will be possible to open only a high risk account, and this entails increased fees and commissions.

 

On the positive side, Lawrange Attorney’s Association has a number of working and proven options for opening a merchant account. We can achieve results if you ask for help.

 

During the opening a merchant account, the following points should be considered:

  1. the acquirer will have to prove that the crypto project is reliable, its management is carried out by experienced specialists with serious and long-term plans for the future;
  2. an application for opening a trading account is supported by a package of documents, including company registration documents and a license for the relevant type of activity, personal documents of beneficiaries and management;
  3. it may be necessary to further explain to the acquirer the specifics of the company’s business processes in order to avoid unforeseen risks.

 

In case of receiving a positive response from the acquirer, a merchant ID is issued to the crypto company. According to the instructions, system integration with the site is carried out. Using the received encryption keys, the merchant account is linked to the site. After that, you can immediately start accepting payments.

 

Notice! A trading account for cryptocurrency allows you to accept payments without reading information from bank cards. When paying for services remotely, the client enters personal data and confirms the withdrawal of funds. Cryptocurrency is then sent to the company’s trading account.

 

 

How to open an account in a payment system for cryptocurrency companies?

 

Most payment systems (Payment Service Providers, PSP) refuse to work with cryptocurrency. Due to high risks, it is easier to immediately refuse a crypto company than to spend time and effort on deep checks. But when compared with banks, the chances of opening an account in the payment system for a crypto company are higher. Some PSPs are willing to delve into the client’s business as well as take risks. Moreover, some payment systems specialize in working with cryptocurrency.

 

Notice! When it is generally impossible for a small company or a startup in the field of cryptocurrency to open an account with a banking institution (banks are sometimes ready to make concessions only to large clients with an established reputation in the market), payment systems become the only way to improve the work related to accepting payments from clients.

 

A payment system is a great option when you need an account as quickly as possible to start your business without missing out on favorable market conditions. Later, when the business gains momentum and the crypto company gains credibility, you can try your luck with opening a bank account.

 

In some cases, Lawrange law firm recommends that its clients open accounts in several PSPs. Practice shows that it is impossible to 100% guarantee the maintenance of an account in an active state. The threat of blocking, freezing the account always remains. And if a crypto company acquires accounts in several payment systems, losses can be minimized through such insurance.

 

You can choose different jurisdictions for opening an account in such circumstances. The selection criteria are the scale and features of the activities of the crypto company. Lawrange Attorney’s Association (law firm?) team is ready to select and offer reasoned solutions. Consider examples.

 

  1. Among the jurisdictions in which you can open an account in the payment system, the United Kingdom is popular. Payment systems, like fintech companies, combine traditional payment services and blockchain technologies. The activity of these payment systems is controlled by the British financial regulator. Clients are offered services for storing different cryptocurrencies on multi-currency fiat accounts and for transferring funds via SEPA and SWIFT.

 

  1. A profitable option is also the payment systems of the Czech Republic, in particular, KoalaPays, which works exclusively with corporate clients. The account is immediately opened in the main currency, then you can add 20 additional currencies. Money transfers are made through SEPA and SWIFT. Processing connection is immediately allowed.

 

  1. The payment systems of Hong Kong and Singapore are ready to cooperate with cryptocurrency projects. For example, the Sterling payment system (Hong Kong) opens accounts for high-risk customers, and shows loyalty when among the beneficiaries of a crypto company are immigrants from post-Soviet countries. An application for opening an account is submitted remotely and is considered very quickly.

 

 

How to open a European bank account for cryptocurrency companies? 

It is almost impossible to open an account for a cryptocurrency project in a regular EU bank. Exceptions are sometimes made only for very large and reputable crypto companies. In this case, we can talk about special conditions of service and special tariffs.

 

Notice! Some banks agree to cooperate on condition that strict confidentiality is maintained. The potential client should also prepare for very rigorous compliance, as well as meeting minimum deposit and minimum balance requirements. Let’s look at a few examples.

 

Switzerland

In the world, Switzerland is considered a cryptocurrency-friendly country. The Canton of Zug once acquired the status of the cryptocurrency center of Europe. At the same time, crypto activities in the country are strictly regulated. An account can be opened if the crypto company is registered under an ICO and has received a license in Switzerland (EU). Legal entities wishing to open an account are subject to the provisions on the appointment of a resident director, the presence of an operating office and local employees.

 

Liechtenstein

In order to successfully compete with Switzerland in attracting cryptocurrency investments, the Liechtenstein government has taken a number of steps to create a favorable climate for crypto projects. But only a crypto company registered in Liechtenstein can open a bank account (as in Switzerland). Several banks work with cryptocurrency projects. But each applicant is checked according to the most stringent algorithms. Crypto-friendly banks of the country offer tools for trading leading cryptocurrencies and conditions for safe storage of funds.

 

Malta

This particular country became one of the first jurisdictions in the world where crypto activities were regulated by laws. The state continues to remain generally loyal to high-risk types of business. At the same time, you can open an account in a Maltese bank only after registering a local company.

 

Estonia

Although the country has a developed legislative framework in the field of digital technologies, local banks are not always willing to cooperate with crypto companies. In general, the requirements regarding the regulation of cryptocurrency activities in Estonia have become tougher, as in other European countries. To open a bank account, you must: a) register a business in Estonia; b) obtain an Estonian license to work with cryptocurrency; c) prove local presence (presence of an operating office and staff, a resident in the management structure). 

 

Opening and maintaining an account to accept payments from clients is equally important and challenging when working in the cryptocurrency business. To minimize the likelihood of refusals to open and the threat of blocking an account, it is worth using the services of professionals to solve such problems. The Lawrange law firm’s team has the knowledge and resources to help you!

 

 

 

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