The short of it is that yes some banks now do accept crypto.
After being lukewarm and staying on the fence during the early days of blockchain technology and the ensuing blockchain-driven fintech revolution, traditional banks have started to gradually and cautiously embrace cryptocurrency. Some have gone ahead to provide cryptocurrency financial services as part of their core functions. Finding a crypto-based bank account is no longer impossible.
In this article I analyze which banks accept crypto, the types of crypto they accept, which crypto exchanges banks prefer to collaborate with and in which countries you can find them.
Which banks accept cryptocurrency
While most banks have shied away from diving into the cryptocurrency market, a few daring ones are fishing for big opportunities. These crypto-friendly banks are offering services including crypto savings accounts, crypto debit cards, crypto credit cards, cryptocurrency investments accounts, and many other cryptocurrency services.
Through these banks, you can easily deposit, transfer, and withdraw crypto assets. You can also convert between fiat money and cryptocurrency. Hence, they provide a seamless integration between cryptocurrency investors and cryptocurrency exchanges. This significantly increases investment options available to their customers.
There are two main types of crypto-friendly banks:
- Traditional banks
- Digital-only banks
These are banks that carry traditional banking in addition to crypto banking. They also have a brick-and-mortar presence.
7 US-Based banks that accept cryptocurrency
The following are the major US banks that embrace cryptocurrency:
- JP Morgan Chase – Chase is one of the earliest American banks to embrace cryptocurrency. It is still the only one to create its own crypto known as JPM Coin. This coin is linked to a built-in crypto wallet known as J.P Morgan Wallet. However, this bank does not directly engage in crypto trading. Rather, it has a smart mechanism by which its account holders can link their bank accounts to a host of crypto trading platforms including Coinbase, Gemini, and other exchange platforms. Thus, it provides facilitative crypto services to its customers instead of trading directly with them or on their behalf. Through this facilitative mechanism, customers can easily buy and sell crypto assets. The big benefit is that this mechanism enables easy and fast conversion between crypto and fiat currency – thus getting rid of a challenge faced by many people trying to enter the crypto business due to many exchange platforms not providing the fiat currency option. Furthermore, for existing customers, no more KYC and/or AML requirements are needed.
- Bank of America – Bank of America is one of the oldest and leading U.S. banks to dive into the crypto space. However, it does this through its Merrill Edge subsidiary – a trading platform for crypto-based Exchange-Traded Funds (ETFs). These are ETFs of major crypto companies.
- Goldman Sachs – Deals mainly in the crypto futures market with Bitcoin futures and Bitcoin ETFs being
- Morgan Stanley – mainly provides wealth management services for Bitcoin-related funds.
- USAA – has partnered with Coinbase to link the USAA account of its customers with Coinbase crypto wallets. This allows customers to track their crypto wallets using this account. They can also go directly to Coinbase to do every other thing that other Coinbase users can do.
- Goldman Sachs now allows trading in a bunch of cryptocurrencies
- Well Fargo offers access to crypto funds but only to its wealthiest customers. They are probably doing this in order not to lose good customers to competitors. However, they are still being cautious with offering a crypto based product to the general public.
International banks that welcome crypto
When it comes to cryptocurrency, Fidor Bank is the European equivalent of JP Morgan Chase. This bank has a partnership with Bitcoin.de (a German equivalent of Coinbase) to provide crypto services to its customers. It has also partnered with Kraken to provide crypto services to its international clients.
Other notable international banks include:
- Barclays Bank (United Kingdom) have already bought a cryptocurrency company called Copper.
- National Bank of Canada (NBC) has partnered with JP Morgan to test blockchain technology.
- Bankera (United Kingdom)
- CHANGE (Estonia)
- Nuri (Germany)
Digital-only banks that deal in crypto
A digital-only bank is more focused on delivering digital financial services. The banking industry is experiencing an exponential rise in digital-only banks due to the fintech revolution.
7 digital-only banks that are crypto-friendly
- Ally – Provides one of the most lucrative savings accounts in the market with a 1.40% Annual Percentage Yield (APY). It also provides various crypto investment opportunities for account holders including futures market products such as ProShares Bitcoin Strategy ETF (BITO) and crypto funds including Grayscale Bitcoin Trust (GBTC) and Osprey Bitcoin Trust (OBTV). It provides a convenient commission-free Ally bank debit card to account holders for such purposes.
- Revolut – has an app that lets account holders trade in over 30 crypto assets Including USDC, DOGE, ETH, BTC, and XRP, among others.
- Simple bank – has the most diverse integrations with crypto exchanges. This allows account holders to trade in a wide array of crypto assets including LTC, ETH, USDC, XRP, DOGE, and BTC, among others.
- Wirex – through its app, users are not only able to trade in leading crypto assets but also enjoy one of the most lucrative cashbacks at 2% in the form of WXT plus up to 10% interest on direct deposits of cryptocurrency and up to 10% on cryptocurrency savings accounts. In addition to supporting crypto assets such as LTC, ETH, USDC, XRP, DOGE, and BTC, among others, it also supports a host of fiat currencies including EUR, GBP, and USD.
- Quontic – provides Bitcoin Rewards checking accounts. In addition, it also provides 1.5% Bitcoin on eligible debit card purchases, instead of cashbacks.
- Juno is technically not a bank. It’s more of a financial services company known for some high yield savings product. But it too accepts crypto that you can buy and sell on their platform.
- Wirex is another fintech company where you can exchange between currency pairs at attractive rates and which also now embraces crypto.
Cryptocurrencies that are bank-friendly
Not all cryptocurrencies are receptive to banks. Banks eschew volatility and thus prefer cryptocurrencies that are stable or well-established. They only use digital currencies and can easily specialize in rendering custodial services for digital assets.
When it comes to banking, not all cryptocurrencies are equal, just as not all fiat currencies are equal. The following are the two most established cryptocurrencies:
- Bitcoin – Most crypto-friendly banks are also bitcoin-friendly banks. In essence, bitcoin serves as the gold standard of digital currencies. It is typical for a crypto-friendly bank to provide a bitcoin wallet that allows its customer to easily carry out bitcoin transactions. Most crypto-friendly banks provide a mechanism that allows the purchase of bitcoin by their customers.
- Ether– Ether is the de facto currency for DeFi and smart contracts. Many potential benefits accrue to banks offering crypto-based investment products when it comes to using smart contracts including speed, efficiency, and automation. Also, banks can leverage the use of the Ethereum platform‘s smart contracts to provide crypto-backed loans.
By their name, stablecoins provide stability of exchange. Bank fees, interests, and other charges are often marginal and can be easily erased by steep fluctuations in currency exchange. To mitigate the high risk of fluctuation, banks would hedge their crypto assets using stablecoins. The two prominent stable coins are:
- Tether (USDT) – Tether is one of the oldest table coins. Its value is pegged to the US dollar.
- USD Coin (USDC) – USDC is the best alternative to USDT. Furthermore, unlike USDT, its stability is guaranteed by rigorous auditing that ascertains and assures the integrity of its dollar reserve.
These are those types of coins that banks use for purposes of international remittances and exchanges.
Why are they ideal for exchange transactions?
They are preferred because of:
- Low transaction fees – since banks charge very little to nothing per transaction, they will shun those coins that have high gas costs. This essentially rules out ETH and BTC whose gas costs are simply uneconomical for bank transfers.
- Availability in sufficient volume – the coins have to be abundantly available since banks transact in large volumes.
- Speed of crypto transactions – bitcoin and ETH are hardly used as exchange coins because their native blockchain platforms are extremely slow. Thus, banks prefer to use them for intrinsic value rather than exchanging value.
- Standard of measure – their value should be relatively stable and predictable against the substantial risk occasioned by price volatility which is a typical characteristic of the cryptocurrency market.
Preferred exchange coins
The following are the most preferred coins:
- Ripple (XRP) – Banks use XRP most for B2B (Bank-to-Bank) transactions. The Ripple blockchain platform has been specially designed for banks and large financial institutions to utilize. This allows custom features per specific bank and customized services.
- Stellar Lumens (XLM) – Banks use XLM mostly for B2C (Bank-to-Customer) and C2B (Customer-to-Bank) transactions.
- Stablecoins – These are coins pegged to a stable currency such as the US dollar. They are preferred due to the lower risk of exchange rate fluctuations. The two most prominent stable coins (that we have already discussed above) are US Dollar Coin (USDC) and Tether (USDT). They also allow an easy exchange between U.S. dollars and other cryptocurrencies.
Bank-friendly cryptocurrency exchanges
There are many crypto exchanges out there. However, a few of them are attractive to banks.
What makes these crypto exchanges bank-friendly?
Factors that make a crypto trading platform bank-friendly are:
- Reputation – in the financial industry, reputation is as worthy as gold. Banks give careful attention to this. Those exchanges with low risk of hacking, insolvency, and inadequate liquidity are more attractive to banks.
- Speed of cryptocurrency transactions – speed is what draws banks to use cryptocurrency for bank transfers. A fast exchange will be a natural attraction to banks.
- Low transaction fees – exchanges that have low transaction fees will be more attractive to banks.
The top-3 bank-friendly crypto exchanges
The following are the bank-friendly cryptocurrency exchanges:
- Coinbase – most of the crypto-friendly U.S. banks have partnered with Coinbase, to facilitate their crypto businesses. These banks include Chase bank and USAA, among others.
- Kraken – most of the crypto-friendly German-based banks have partnered with Kraken to provide crypto services to their clients. Leading this partnership is the Fidor Bank.
- Ripple – ok its not an exchange but I have bundled it here because as we have discussed above, Ripple was designed to provide a special facility to crypto businesses in the financial sector. The most important facility is cross-border remittances.
Crypto-friendly bank cards
Both debit cards and credit cards are pegged to specific banks and thus subject to jurisdictional issues. As a rule of thumb, most crypto-friendly countries have crypto-friendly banks and most crypto-friendly banks have crypto-friendly cards.
The crypto-friendly credit cards are ideal for making credit card purchases using cryptocurrencies. On the other hand, debit cards are ideal for those who want to make crypto transactions without incurring debts. Many offer these cards without charging additional fees.
The two major international cards that have partnered with crypto-friendly banks to provide cryptocurrency payments and crypto credit card transactions are:
- Visa Card
- Master Card
The cryptocurrency facility provided by these cards varies depending on what their partners provide.
Central Bank Digital Currencies
While Central Bank Digital Currencies (CBDCs) are not cryptocurrencies but rather traditional currencies in a digital form, they serve as the best catalyst for banks and other financial institutions to implement digital currencies and cryptocurrency. CBDCs serve to overcome the rigidity of fiat currencies. They are intended to make banking services between national banks fast and efficient.
The CBDCs have not only digitalized traditional bank operations but have also become the stepping-stone by many crypto-friendly countries toward normalizing cryptocurrencies within their jurisdictions. With CBDC being a legal tender, cross-national bank transfer between various digital wallets has become swift and instant.
Crypto-friendly countries with banks that accept crypto
Whether banks will be crypto-friendly or not depends a lot on whether their host countries are crypto-friendly or not. This is because they are legal entities that have to operate within the confines of their respective jurisdictional laws.
Crypto-friendly countries can fall into two broad categories:
- Active embracers: These are countries that have legalized and established policies that guide and promote cryptocurrencies.
- Passive embracers: These are countries that have not banned cryptocurrencies but have neither established policies nor laws that guide and promote cryptocurrencies.
We can explore these countries based on their geolocations, that is Americas, Europe, Asia, Africa, and Oceania.
These countries include:
- El-Salvador – became the first country in the universe to accept bitcoin as a legal tender. It is an active embracer of cryptocurrency
- The United States – While the US has not banned cryptocurrency, it has many restrictions on its usage. It is thus a passive embracer. However, it is the world’s capital of cryptocurrency trading and investment.
- The sanctions-prone countries – Cuba, Venezuela, and Nicaragua have embraced virtual currency, especially cryptocurrency, as a means of economic survival due to heavy sanctions imposed on them by their northern neighbor – the US.
- Panama – Panama has one of the broadest legislations covering the use of cryptocurrencies. Thus, unlike most crypto-friendly countries, it has gone beyond bitcoin to cover major altcoins including Ether, Litecoin, Algorand, Stellar Lumens, Elrond, IOTA, and XRP.
The active embracers of cryptocurrency in Europe are:
The most active embracers of cryptocurrency in Asia are:
Africa has both active and passive embracers of cryptocurrency. But, due to an endemic lack of capacity to regulate and control fintech complexities that come with cryptos, the playing field is rather open and up to people to decide whether to participate in the crypto space or not. Low participation by people is rather due to a lack of infrastructure, knowledge, and skills than due to state control.
The following are countries where cryptos have a significant impact:
- Central Africa Republic (CAR) – this became the first and the only African country to declare bitcoin as a legal tender. It is also the second country after El Salvador.
- Madeira – bitcoin transactions are legalized in this country. The intensity of cryptocurrency usage is highest in Africa.
- Egypt – bitcoin is legalized and regulated.
- The Big3 Subs – in terms of the number of crypto holders, Nigeria (13 million), Kenya (4.5 million), and South Africa (4.3 million) lead Africa. In terms of holders per capita, Kenya leads. However, the countries themselves are passive embracers as they have neither legalized nor banned the use of cryptos.
This is probably the region with the widest acceptance of cryptocurrencies. None of the countries has banned the use of cryptocurrencies even though some are passive embracers. Some of these countries include:
- Vanuatu – active embracer
- Tuvalu – active embracer
- Palau – active embracer
- Fiji – active embracer
- New Zealand – passive embracer
- Australia – passive embracer
Crypto tax-free countries
These are not only crypto-friendly countries but have gone ahead to offer tax-free havens for crypto investors. These countries include:
- Cayman Islands – reputed for its tax-free treatment of crypto investments.
Crypto citizenship countries
These countries are not only crypto-friendly but can also issue you citizenship and passport based on your crypto investment. These include:
- Antigua – crypto passport in exchange for bitcoin donation worth $100,000
- Vanuatu – you get 5-year citizenship for only $130,000 worth of bitcoins
The future of banking is tending towards the use of digital currencies which have become the most ideal for cashless transactions. Furthermore, cryptocurrencies are becoming the most prominent due to the security features of blockchain technology. Many countries and their respective banks are gradually embracing cryptocurrency and this trend is on a long-term positive trend.