Crypto-friendly banks are aptly named because they permit their account holders to buy and redeem cryptocurrency using their bank accounts. They do not all offer the same services. The most crypto-friendly banks offer crypto-related services and those expected from traditional bank accounts.
Crypto-friendly banks must comply with the Financial Services Compensation Scheme (FSCS) and Financial Conduct Authority (FCA). Account holders benefit from the licensing regime because it imposes regulatory account safety and security requirements, a fiduciary duty on the banks, and insures their accounts up to GBP 85,000. The leading banks have commented that they take more measures to protect their customers from fraudulent activity than the crypto exchanges.
The rise of crypto-friendly banks also provides a nurturing environment for small and medium-sized businesses (SMEs) that want to incorporate crypto transactions into their operations or are strictly crypto-based enterprises. The continuing reluctance of traditional banks to address this market need means that crypto-friendly banks, powered by SMEs, may be the next disruptive innovation in the banking and finance industries.
Let’s look at the most crypto-friendly traditional and challenger banks.
Royal Bank of Scotland (RBS) and NatWest
The UK government owns the Royal Bank of Scotland (RBS), and RBS owns NatWest. Their account holders can purchase crypto tokens from crypto exchanges using credit/debit cards and wire transfers. If you execute crypto transactions on reputable crypto exchanges, you won’t experience any problems with these banks. However, if you try to execute transactions on crypto exchanges that have been flagged as high-risk, your transaction may be blocked by the banks. Note, they have banned business account holders who accept payment for goods and services since April 2021.
Standard Chartered Bank (SCB)Standard Chartered Bank allows its account holders to deposit and withdraw crypto funds from crypto exchanges like Gemini and Coinbase. However, it does not allow them to purchase crypto tokens using its credit/debit cards. Its investment arm, the Standard Chartered Ventures (SCV), is developing a trading desk and custody operation.
The custody operation, Zodia, is a partnership with Northern Trust and was launched in 2020. Its purpose is to facilitate institutions’ investment in crypto assets (e.g., Bitcoin, Ether, Litecoin, XRP). SCV will maintain custody of the crypto assets after the institutions acquire them. SCB also has plans to launch a crypto brokerage and trading platform in partnership with Hong Kong’s OSL exchange.
Challenger banks challenge the high-street banks’ dominance of the banking industry. They are also referred to as neo-banks and app-based banks.
Nuri is based in Germany. Launched initially as Bitwala and rebranded as Nuri, it has 300,000 account holders. It offers the full suite of services characteristic of traditional German bank accounts. These services are augmented by banking features that help account holders manage, save, and multiply their money. In addition, account holders can create savings plans and get a free debit card with unlimited free ATM withdrawals.
Its crypto-related services permit account holders to buy crypto tokens and receive interest payments on their crypto assets directly from the bank via the bank’s Bitcoin Interest Account. Account holders can purchase Bitcoin and Ether on the app’s platform. They can also instantly redeem their crypto tokens for fiat currency when using their Nuri credit/debit card to pay for things.
Orounda is a Scottish bank that focuses on businesses. It provides them with EU and IBAN accounts that corporations can use inside and outside the EU. Furthermore, It offers both SEPA and SWIFT services to its account holders. In total, its customers can choose from 50 different payment-related business solutions. Its goal is to help businesses accept crypto payments for goods and services.
Account holders can execute non-SEPA wire transfers. They can have multiple accounts and internally transfer funds between them. More than that, the app’s platform has a lot of tools that benefit its users in maintaining their accounts, analysing their spending, and performing other activities.
Fidor is the bank that creates banks. Fidor is used by businesses, crypto exchanges and other financial institutions to launch their operations and get them to market quickly and efficiently. Its claim to fame is that it is the oldest crypto bank in the UK. It has more experience complying with the changing crypto regulations than any other UK bank.
This bank has some impressive clientele. Its account holders include Kraken, Luno, and Bitcoin.de. If you want a fast, seamless transfer from your Kraken account to your account, you should open an account with Fidor.
The bank primarily targets corporate clients, big investors, and crypto exchanges. It has two types of accounts, Fidor Exchange, which focuses on crypto exchanges, and Fidor ICO, which targets firms doing initial coin offerings.
Cashaa has personal and business wallets that work with over 70 fiat currencies and four cryptocurrencies. It also has its own native token, CAS. If platform users use CAS, their onboarding and transaction fees are discounted. CAS users can also stake their tokens and use them for an account upgrade. This bank is especially attractive because it offers EU, USA, and UK accounts. Its UK and EU accounts can process SEPA, SWIFT, and Faster Payment transfers. Bank customers are notified of debits to their accounts via notifications. Furthermore, your crypto tokens and fiat currency can be exchanged internally. This crypto-friendly bank is a heavy hitter. It’s trusted by large, well-capitalized crypto firms like Paxful, Huobi, CoinDCX, and Nexo.
This app-based bank provides its customers with a crypto exchange, crypto wallet, and broker on its platform. It has successfully merged traditional banking and blockchain technology. B2Bs and B2Cs greatly benefit from this marriage of services and technology. Its seamless, borderless transactions across the globe. It can process large volume transactions without moving the market.
Revolut focuses on individuals. It provides its account holders with a card that permits them to withdraw funds from their accounts in different fiat currencies. This is done to help them avoid transaction fees when making ATM withdrawals in countries with different fiat currencies. Account holders can purchase cryptocurrency on its platform using GBP or EUR. Plus, it supports 30 fiat currencies, and account holders can trade up to 5 cryptocurrencies on the app’s platform. Another benefit is that the app users can create a maximum of 5 internal personal or business debit cards to pay for online purchases. They can also set up their accounts to cover recurring expenses. Another helpful feature is the platform’s tools enable its customers to analyse their spending patterns. Unfortunately, account holders cannot transfer their crypto tokens to a private/non-custodial wallet.
It is a full-fledged bank that serves more than 2 million customers. Its services are available to people in the EU and UK. Customers can choose from three different account types (e.g., Standard, Premium, Metal) and get a UK account number. Account holders can execute SWIFT and SEPA transfers on the platform. Besides being able to trade cryptocurrency, bank customers can trade stocks and shares. It can also be used with Google Pay and Apple Pay.
MuchBetter is a crypto-friendly bank for gamers and crypto enthusiasts. It can be used on gaming platforms that accept the app. For those only interested in banking services, it is a one-stop-shop. Its customers can send payments to merchants all over the globe. Furthermore, its wallet easily handles fiat currency and cryptocurrency. Another plus, its fees are lower than its competitors, who offer similar safe, secure crypto wallets.
Most high-street banks are still reluctant to incorporate crypto-related services into their operations. This situation is aggravated by the low percentage of UK people who own or trade cryptocurrency, especially in an automated fashion. Nevertheless, SMEs, crypto exchanges, and crypto-related firms need these services to launch themselves into the market. Moreover, their customers need crypto-friendly banks to do business with crypto firms and manage their crypto portfolios.
At this time, we see that RBS & NatWest, Nuri, Revolut, Cashaa, and MuchBetter represent the diversity in services offered to individuals and companies by crypto-friendly banks. Furthermore, despite the distrust that high-street banks and the UK regulatory authorities have towards crypto exchanges and businesses that choose to accept only crypto payments, crypto-based services and payment structures continue to evolve and fill in gaps in the traditional market. As there are more crypto-friendly banks and partnerships between high-street and crypto-friendly banks in the works, we can expect to see more progress toward integrating the two financial systems in commerce.