Navigating the Landscape of Crypto-Friendly Banks
Traditional banking and the volatile cryptocurrency market have clashed, resulting in the formation of a new sort of financial institution: crypto-friendly banks.
These financial institutions have become critical nodes. As the allure of digital assets continues to tempt crypto investors and enthusiasts alike, conventional banking institutions are integrating with the decentralized realm of blockchain technology.
In this article, we’ll dive into the cryptocurrency market and identify the best crypto-friendly banks.
Table of Contents
What is a crypto-friendly bank?
A crypto-friendly bank is a financial institution that encourages crypto-related businesses by accepting cryptocurrencies and providing various services: crypto trading, integration with crypto exchanges, and even insurance for crypto businesses.
Some progressive banks are making a name in the crypto space by offering insurance for these businesses, while others go beyond by providing credit and debit cards with BTC cashback.
Furthermore, customers are able to move money back and forth between their bank accounts and cryptocurrency platforms since the banks provide this functionality. These are the main services that such banks offer:
- Use of issued credit and debit cards for buying and selling cryptocurrencies.
- Execution of wire transfers to cryptocurrency exchanges and similar entities.
- Facilitation of cash-outs from cryptocurrency investments.
Differences between traditional and crypto-friendly financial institutions
Cryptocurrency-friendly banks offer integrated systems for cryptocurrencies and provide online banking services.
As a consequence, these banks are a fantastic option for beginners searching for a straightforward method of investing in cryptocurrencies. In comparison to cryptocurrency wallets, these banks add a layer of security to the holder’s funds.
It’s worth noting that they frequently deal with well-known cryptocurrencies. It is advantageous for investors who are faced with the difficult task of choosing among hundreds of possibilities. Opting for major cryptocurrency projects supported by Bitcoin-friendly banks may lead to better long-term choices.
Furthermore, these banks actively support the cryptocurrency ecosystem by offering various services. They facilitate crypto trading, integrate with cryptocurrency exchanges, and even extend insurance coverage to crypto-related businesses.
One of the key advantages of these banks is their seamless handling of funds between traditional accounts and cryptocurrency platforms.
In some cases, they go beyond by introducing credit and debit cards that provide cashback in BTC.
This includes the use of issued debit or credit cards for buying and selling cryptocurrencies, executing wire transfers to cryptocurrency exchanges, and enabling cash-outs from cryptocurrency investments.
The distinction between traditional banks and crypto-friendly banks is significant. Traditional banks often exhibit caution or skepticism toward cryptocurrencies and may not offer related services.
However, banks that are “crypto-friendly” are enthusiastic about cryptocurrencies and provide a variety of services tailored to the cryptocurrency industry.
Pros and Cons of Crypto-Friendly Banks
Let’s briefly go through the benefits and drawbacks of the best crypto-friendly banks before going into our top picks.
Here’s a concise list of advantages and features offered by crypto-friendly banks:
- Simplified Crypto Access: Crypto-friendly banks bridge the gap between traditional banking and complex blockchain technology, making cryptocurrencies easily accessible through familiar banking systems.
- User-Friendly Onboarding: These banks provide a comfortable entry point for newcomers by simplifying the process of getting involved in cryptocurrencies, catering to both self-custody enthusiasts and those seeking a more traditional approach.
- Effortless Off-Ramping: Unlike traditional banks, crypto-friendly banks facilitate hassle-free withdrawal of fiat currencies from crypto exchanges, enabling users to efficiently realize profits or mitigate losses.
- Support for Crypto Businesses: Crypto-friendly banks offer comprehensive support for blockchain and fintech startups, ensuring compliance with real-world regulations and providing essential services for insurance and operations.
- Mobile App Accessibility: Most crypto-friendly banks offer intuitive mobile apps for Android and iOS, enabling users to monitor the dynamic crypto world in real time and execute transactions on the go.
- Integration with Traditional Finance: Despite the decentralized nature of cryptocurrencies, converting them to fiat currency remains a practical necessity. Banks that are open to cryptocurrency transactions serve as an essential connecting link between the cryptocurrency world and more conventional forms of monetary exchange.
- Easier Market Entry: Recognizing the growing interest in cryptocurrencies as investment assets, these banks simplify market entry, meeting the demands of clients who seek a smoother way to enter the crypto market.
Crypto-friendly banks play a crucial role in facilitating seamless interaction with the cryptocurrency ecosystem by offering these advantages and features.
Unfortunately, any crypto-friendly bank comes with certain drawbacks and limitations:
- Volatile Asset Exposure: These banks have a historical tendency to hold substantial amounts of volatile digital assets. Unfortunately, this exposure can strain their reserves, leading to potential bankruptcies or insolvencies, as seen with instances like Silvergate and Signature Bank.
- High Transaction Fees: While aiming to simplify crypto transactions, these banks often impose higher fees compared to using a personal crypto wallet. This premium service can make crypto-related transactions more expensive.
- Limited Functionality: The scope of services offered by crypto-friendly banks is primarily focused on cryptocurrency trading and holding (HODLing). They may lack the extensive utility provided by the DeFi (Decentralized Finance) space, which offers diverse options like staking, yield farming, and lending.
Considering banks that facilitate cryptocurrency purchases, it’s evident that they might not encompass the full range of services typical of traditional banks.
A bank centered around cryptocurrency infrastructure may not provide conventional offerings like suitable home equity loan options.
While crypto-friendly banks offer benefits, users should be aware of these potential limitations and evaluate their options based on their specific financial needs and preferences.
The best crypto-friendly banks in the UK
If you’re seeking the finest finance provider to create a bank account that takes cryptocurrencies, you’ve come to the right place.
This list features the best crypto-friendly banks in the UK that provide services from traditional banking and savings accounts to crypto exchanges, crypto savings accounts, and even a Bitcoin rewards checking account.
Royal Bank of Scotland (RBS)
The Royal Bank of Scotland accepts cryptocurrency transactions, so you may use your RBS credit or debit card to buy cryptocurrencies.
It also supports withdrawals and deposits to exchanges. However, they have limitations in place for security purposes.
However, from March 16th, 2023, RBS is implementing safeguards against potential fraud by capping daily and 30-day Debit Card transactions at £1,000 and £5,000, respectively.
Note that RBS now blocks using their Credit and Charge Cards for crypto purchases across all customer categories. This protective step ensures a secure environment, aligning with their commitment to user safety.
RBS’s customer-focused approach is evident in its user-friendly support center, which offers detailed insights into its crypto policies and updates.
While RBS is friendly to crypto, it’s advisable to stick to major cryptocurrency exchanges like Coinbase and CEX.io for smoother transactions.
A leading UK investment bank, Barclays Bank, has been consistently supportive of blockchain and cryptocurrency. While their previous partnership with Coinbase concluded, Barclays remains open to crypto-related activities.
Barclays enables payments to and from crypto exchanges, and it allows credit and debit card purchases for cryptocurrencies. The bank prioritizes transaction safety, adapting regulations based on exchange security levels.
Though there have been reports of limitations on certain exchange-related activities, many customers find it easy to manage crypto funds through Barclays.
Despite a non-Sterling transaction fee of 2.99%, Barclays offers a promising avenue for those venturing into crypto within the realm of traditional finance. The bank’s continued engagement in crypto signals a potentially bright future for crypto transactions.
Nationwide Bank remains crypto-friendly, allowing debit card purchases and easy withdrawals/deposits to and from crypto exchanges.
However, recent updates include limits on buying cryptocurrency through Faster Payments and debit card payments, based on bank account type.
For adult or student accounts the daily limit is £5,000. Additionally, for FlexOne accounts, it’s £100. Nationwide emphasizes safety by endorsing regulated digital asset exchanges.
However, they no longer accept credit card payments for crypto and have temporarily suspended cryptocurrency transactions with the Binance crypto exchange.
Best crypto-friendly alternatives
swissmoney is a Swiss fintech that seamlessly integrates traditional financial management services with advanced crypto solutions, offering a comprehensive suite of services to empower anyone’s financial journey.
Prepaid cards for convenient online and in-store transactions, a user-friendly mobile app for card management, and a crypto wallet for secure cryptocurrency exchange and storage of digital assets in various currencies are among the platform’s offerings.
Users can quickly and easily convert currencies, complete international transactions, and access up-to-the-minute data on currency rates.
- Fiat to cryptocurrency exchange.
- Buying, receiving, sending, and selling crypto assets.
- Support for over-the-counter trading and liquidity API banking.
- Compatibility with two networks and five currencies: TRX, BTC, ETH, USDT, and USDC.
- Detailed transaction history.
- swissmoney virtual card.
Wirex stands out among the best crypto-friendly banks with its distinct approach. Unlike others that shifted from traditional banks, Wirex was purpose-built as a crypto powerhouse from the beginning.
This crypto bank offers a wide range of crypto services, functioning as a complete trading platform for over 37 digital currencies and featuring a cross-chain bridge for smooth token transfers across different blockchains.
Additionally, the account provides staking services and supports a crypto wallet compatible with NFTs, allowing interaction with DeFi dApps.
Operating with Mastercard, Wirex crypto bank enables real-time spending of 21 traditional and digital currencies.
- Manage crypto (BTC, LTC, XRP) and traditional money (GBP, USD, EUR).
- Add funds via credit card, debit card, or bank transfer.
- Crypto exchange at live rates.
- 21 digital and traditional currencies.
Juno is a fintech company that operates as a functional fiat currency bank account and easily integrates with crypto wallets through the Juno app. Users can efficiently convert their crypto assets to an FDIC-insured account, ensuring convenience and security.
The app accommodates various crypto assets, including popular stablecoins like USDC. Users have the flexibility to fund their checking account with USDC across various blockchains.
A standout feature of Juno as a premier crypto-friendly bank is its ability to automatically convert a portion of incoming paychecks into crypto.
Additionally, the Juno crypto debit card empowers customers to use digital assets for payments and ATM cash withdrawals.
- Buy, sell, and store crypto starting from $1.
- International transfers.
- No ACH fees.
- Strong customer support.
- Direct deposit for receiving paychecks in crypto.
Which bank is crypto-friendly in the UK?
Several banks in the UK are crypto-friendly. Some of these include:
- Royal Bank of Scotland
- SEBA Bank
- Mode Banking
- Ally Bank
Why are banks afraid of Bitcoin and cryptocurrencies?
Generally, banks have a cautious attitude toward digital currencies and decentralization. This leads to reluctance to accept Bitcoin and other cryptocurrencies. This hesitation stems from various factors:
Cryptocurrency’s inherent volatility is a main concern for banks. They are driven by profit and seek to safeguard their investments, as well as their customers’ funds.
Slight fluctuations in the crypto market can swiftly devalue assets, making banks apprehensive about engaging with such uncertainty.
It is anticipated that the regulations currently in place that control the handling of digital money will become a great deal more stringent as the use of cryptocurrencies continues to increase.
In many jurisdictions, there is a lack of clearly established norms that regulate how banking institutions should manage transactions involving Bitcoin. It sets a higher standard for those who would like to participate in the activity.
Moreover, financial institutions, including banks, are skeptical about Bitcoin and similar cryptocurrencies due to these dangers.
As a result, numerous traditional banks have begun to limit the use of bank accounts for Bitcoin transactions.
Which UK banks are not crypto-friendly?
Roughly 50% of banks in the UK do not offer any form of cryptocurrency support. Many regulated banks impose restrictions on transactions and exchanges.
Among the banks that are not crypto-friendly are:
- Lloyds bank
- Starling Bank
- First Direct
- Metro Bank
- Virgin Money