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 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 in working order. Moreover, the second point is a much more serious obstacle than the first.   Opening an account for a crypto company is a difficult task and requires special knowledge. But solutions can be found, since representatives of the financial services market are sometimes ready to cooperate in connection with the opening of new areas of profit. For Lawrange, the opening of bank accounts for international business is one of the main areas of specialization. We can also be useful for high-risk businesses, including cryptocurrency companies.

Basic information on opening accounts for a cryptocurrency business

If the activity of a legal entity is related to cryptocurrency, banking institutions identify such a company as a “high risk client”. In 2021, the Basel Committee on Banking Supervision, one of the most reputable financial regulators in the European Union, proposed introducing a risk ratio of 1250% for cryptocurrencies. If there are crypto assets, the bank must hold fiat currency in reserve at a rate of 1: 12.5 relative to the value of these assets.   Bank representatives are categorical when it comes to cryptocurrency. More than 95% of banks refuse to open an account to crypto companies immediately and without talking. The number of traditional banks willing to do business with the cryptocurrency business is limited.   For your information! Even in the case rare good 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 bank’s reputation before starting cooperation. Alternatively, you can use the option with opening an account in the payment system.   Why do banks refuse to work with crypto projects?

  1. Financial institutions are reluctant to waste time learning and properly understanding the nature of cryptocurrency transactions. Bankers lack an understanding of the nature of such transactions.
  2. The volatility of a non-fiat currency, difficultly predictable fluctuations in the exchange rate make it extremely high risk to nullify any profit earned earlier.
  3. The lack of regulation at the legislative level of cryptocurrency activities attracts fraudsters to this area who seek to launder money obtained illegally. When a crime is committed, reputational damage is inflicted on the bank, regardless of who the client is in this case: an attacker or a victim.
  4. Governments in a number of jurisdictions are trying to regulate the cryptocurrency market. It is difficult to predict what consequences such steps will entail.
  5. The impact of cryptocurrencies on the economies of individual states and on the world economy has so far been little studied. Governments have not fully decided how to benefit from cryptocurrency transactions, so for now they are trying to discourage them.

 

Features of opening an account for a cryptocurrency project

Crypto companies to open an account need to prepare for serious checks within the AML and KYC procedures. Banking structures and payment systems, while cooperating, try to avoid possible sanctions, since cryptocurrency activities are traditionally associated with money laundering.   The crypto company is required to:

  • a license from a prestigious jurisdiction (a license issued in the EU is considered the best option);
  • availability of reliable algorithms for checking clients;
  • the presence of business experience in this area from the owners or managers;
  • 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: The licenses of the EU countries are governed by the relevant EU Directives, therefore they are similar to each other. The broadest among them is the Electronic Money Institution (EMI). However, to obtain it, a crypto company must have an authorized capital of 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 . The rates will be higher than when opening corporate accounts for other companies.   Lawrange’s consultants select personalized solutions for each client. Universal options are not acceptable due to the above circumstances. When choosing a bank or payment system to open an account, the following is taken into account:

  • the jurisdiction in which the business is registered;
  • the location of the majority of clients (target audience) and other counterparties;
  • monthly and annual turnovers;
  • 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 contribute to benefits in a particular case.   Among the jurisdictions with which Lawrange AK works:

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

*** Note: 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 allowed to open an account remotely? Yes. Where can you 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 Seychelles. These jurisdictions are distinguished by their loyalty to 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 a year, $ 36 billion in cryptocurrency transactions went through the Seychelles.   For your information!The conditions for opening an account may provide for 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 efficient transfers. Clients are given the opportunity to obtain a personal IBAN. Banking institutions have established Internet banking. 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 Seychelles, it is allowed to open an account remotely. The customer verification procedure is fast. For example, Migom Bank (Dominica) uses its own compliance department in Europe for this purpose.   Package of documents to open an account for a crypto project in banks in Dominica, Nevis and Seychelles includes:

  1. scanned copies of personal documents of owners and directors (notarized);
  2. CV of the owner of the company;
  3. proof of place of residence (the best option is receipts for payment of utilities) not older than three months;
  4. set of constituent documents for the company;
  5. letters of recommendation, including from a certified auditor;
  6. description of the company’s activities;
  7. 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, you need to take care of the account that will receive customer payments – a merchant account (payment processing). This tool allows you to accept funds (in particular, cryptocurrency) directly on the site from various letters of credit. In this case, the payment data of users is requested not on the website, but on the protected pages of the processing center.   For your information! A merchant account is a code for identification in the payment system. Having such a trading account provides a crypto company with a number of advantages:

  • high speed of calculations – a thousand or more transactions per minute;
  • the possibility of making payments at any time of the day or night – the processing service works around the clock, including on 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 a bank or to a payment system where payment processing services are provided. Since we are talking about a crypto project, it is necessary to understand that it will be possible to open only an account of the high risk category, and this entails increased tariffs and commissions.   On the positive side, Lawrange has a number of working and proven options for opening a merchant account in stock. We can achieve results if you ask for help.   When opening a merchant account, you should consider the following points:

  1. the acquirer will have to prove that the crypto project is reliable, its management is carried out by experienced specialists who have 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 corresponding type of activity, personal documents of the beneficiaries and management;
  3. it may be necessary to additionally explain to the acquirer the specifics of the company’s business processes in order to avoid unforeseen risks.

In case of a positive response from the acquirer of the crypto company, a merchant ID is issued. 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.   For your information! 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. The 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 the high risks, it is easier to immediately refuse a crypto company than to waste time and effort on deep checks. But when compared with banks, the chances of opening an account in a payment system for a crypto company are higher. Some PSPs are willing to delve into the client’s business and take risks. Moreover, some payment systems specialize in working with cryptocurrencies.   For your information! When it is generally unrealistic for a small company or startup in the field of cryptocurrency to open an account in 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 establish work related to accepting payments from customers.   The payment system is an excellent option in cases where an account is needed as quickly as possible in order to start with your business, without missing out on favorable conditions in the market. Later, when the business gains momentum and the crypto company gains credibility, it will be possible to try your luck with opening a bank account.   In some cases, AK Lawrange recommends its clients to open accounts in several PSPs. Practice shows: it is impossible to guarantee the maintenance of the account in an active state by 100%. The threat of blocking, freezing the account always remains. And if a crypto company acquires accounts in several payment systems, losses through such a safety net can be minimized.   You can choose different jurisdictions for opening an account in such circumstances. The selection criteria are the scale and peculiarities of the activity of the crypto company. Lawrange’s consultants are ready to select and offer reasoned solutions. Let’s look at some examples.

  1. The United Kingdom is popular among the jurisdictions in which you can open an account in the payment system. Payment systems, like fintech companies, combine traditional payment services and blockchain technologies. The activities of these payment systems are controlled by the British financial regulator. Clients are offered services for storing different cryptocurrencies in multi-currency fiat accounts and for transferring funds through 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 20 additional currencies can be added. Money transfers are made through SEPA and SWIFT. Connection of processing is allowed immediately.

 

  1. 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 clients, and shows loyalty in the event that among the beneficiaries of the crypto company are people from the post-Soviet countries. The 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 an ordinary 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 rates.   For your information! Some banks agree to cooperate on condition that strict confidentiality is maintained. The prospect should also prepare for very rigorous compliance, as well as meeting the minimum deposit and minimum balance requirements. Let’s look at a few examples.

Switzerland

Switzerland is considered a crypto-friendly country in the world. The canton of Zug at one time acquired the status of the cryptocurrency center of Europe. At the same time, crypto activity in the country is strictly regulated. An account can be opened if the crypto company is registered under the ICO and 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 a functioning 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 that 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 strictest algorithms. The country’s crypto-friendly banks offer tools for trading leading cryptocurrencies and conditions for the safe storage of funds.

Malta

It was this country that became one of the first jurisdictions in the world where crypto activity was 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 legal 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 a functioning office and staff, resident in the management structure).   When working in the cryptocurrency direction, it is equally important and difficult to open and maintain an account to receive payments from customers. To minimize the likelihood of denials in opening and the threat of blocking an account, it is worth using the services of professionals to solve such problems. The AK Lawrange team has the necessary knowledge and resources to help you!
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