While retail businesses have quite a few options to get paid in Bitcoin and other cryptocurrencies, companies that deal directly in digital assets have much bigger problems. Take for example the thousands of stores on Shopify that have started accepting Bitcoin. All the payment systems are integrated, and they don’t have to worry about much, with the exception of keeping their wallet keys safe.
Institutions that deal with the assets directly, such as exchanges, are another deal entirely. Opening up a bank account for any business that deals exclusively with digital cryptocurrency assets can give anyone a headache.
Yes, the situation is slowly starting to get better, particularly in Europe where certain countries have found their niches as providers of cryptocurrency and blockchain test regulations. Estonia was one of the first countries to regulate how cryptocurrency exchanges work, get licenses and are overseen by a governmental organization.
Following on from them Malta has become known as Blockchain Island for the smart and future looking laws that it has established to increase the amount of innovation and investment in the country. However, even with the government behind it, it is difficult in opening a business account for crypto or blockchain based startups. There is a six month wait period for registration with the MFSA (Malta Financial Services Authority), and this can have an extremely negative impact on any businesses looking to take advantage of the laws that are ahead of its time.
Lithuania has also recently introduced legislation that gives extremely robust guidelines for both cryptocurrencies and ICOs, all the way from how it fits into the accounting system to how it is taxed. France has even more recently done the same, with its PACTE guidelines.
There are multiple options that a prospective business can to for alternatives. Some go completely bank free and focus 100% on receiving, and paying, in cryptocurrencies. Businesses that are 100% fiat free are difficult to run at the moment, however, so it is only an option for those that are started in very specific jurisdictions where there is a culture of paying with Bitcoin. One such place is Slovenia, where cryptocurrency adoption has seen a sharp rise since the opening of Bitcoin City. Bitcoin City is a shopping center where the majority of the businesses offer cryptocurrency as a payment option and the company behind Bitcoin City has released an instant-payment app that is seeing increasing use around the country.
Companies that go totally crypto will use services such as ConnectPay, MisterTango, and SendFriend to deal with debtors and creditors. Smaller banks are also getting into the action, trying to ride the wave of crypto and try to position themselves as the big banks of the future.
Silvergate Bank, based in San Diego, told Bloomberg News recently that digital asset businesses have over $40 billion worth of assets that could be in banks right now. They want to service a portion of that and reap the rewards. Others, like Binance, simply ignore banks altogether. In fact, over 90% of Binance employees are paid in the company’s native token BNB.
The first is finding a friendly region. This is much easier if you are close to the EU, or your business is such that you can easily relocate. This is not an option for a startup that relies on staying in a particular jurisdiction. It is also difficult for fledgling companies to find money to employ directors to stay in jurisdictions that are crypto-friendly.
The second is to create a network of crypto businesses in your own region. Some may have had better luck opening a business account with a bank and would probably be willing to lend a hand. Having key people in your business settled in the area is also a plus. The more people they know, in the banks and in the local cryptocurrency community, the better your chances of opening a business bank account.
The third might seem counter-intuitive. Simply smile and cooperate with whatever bank you have chosen. A kind word and a smile have opened many doors in the past, and that does not stop now. Whatever benefits cryptocurrency might offer, it will not be possible without the help of others. Due to regulations, banks have extremely thorough KYC/AML checks and so long as you are open, and have all your necessary documentation you might just get that little bit of extra luck.