It should come as no surprise that establishing the core for a cryptocurrency or blockchain firm is more difficult than setting up, for instance, the core for an eCommerce business. Only a few nations throughout the world regulate crypto businesses and offer a legal framework for them to operate within a defined scope.
When most traditional banks are presented with the term “cryptocurrency,” they often pull back and respectfully inform you that they are unable to open an account for you owing to internal policies. At present, the assistance of legal frameworks for conducting crypto and virtual asset enterprises are assisting financial institutions in adapting to this new world of finance.
The most difficult component of creating a crypto-friendly bank account for a crypto firm is ensuring that all of the necessary documentation and compliance procedures are in place. Because the cryptocurrency industry continues to be scrutinised by regulators, most traditional banking institutions refuse to open accounts for any cryptocurrency-related firm.
If you’re considering starting a crypto business or already have one and want to create a bank account, here are some of the most important requirements to look out for:
1. Where Is Your Business Registered, And Do You Need A Crypto Licence For Your Business?
Even if an offshore firm is licensed, most financial institutions will not accept it. When establishing your crypto bank account, it’s important to think about the jurisdiction and how it will affect the service providers you’ll need to run it. If you’re starting a regulated business, be sure you understand the rules in your jurisdiction because no one will establish an account for you until you have a licence.
2. Document Translation And Notarization
Companies, like any other financial institution, need to gather information on the business and its shareholders. What would be often forgotten is that such documents must be presented in a way that is acceptable to the financial institution’s jurisdiction.
3. Understanding Your Business Structure
Crypto banks understand that company structures can be complex and have many layers. Helping the onboarding staff understand how your company operates is the greatest way to ensure a pleasant onboarding process. Where does the money originate from, where does it go and so on. As a financial institution, it is your bank’s obligation to understand your business as well as to both deliver excellent products and services and to comply with regulatory requirements.
4. Level Of Compliance
The majority of crypto businesses offer a service that is similar to financial services and has regulatory and fraud risks. Banks expect a certain level of compliance from all clients since they won’t be able to help you until you have strong anti-money laundering policies and fraud risk management processes in place, as well as a professional compliance officer, ID verification software, transaction monitoring, and blockchain monitoring. It’s critical that these procedures not only be written down but also implemented in practice and backed up by documentation.
Opening a completely compliant bank account for a high-risk industrial company is not an easy task. However, it does not have to be a lengthy procedure because in most cases, banks usually are able to open an account in a matter of days if all of the required paperwork is submitted. However, some documents must be notarized or translated before being filed, which makes the process slightly longer.