Crypto Banking Offshore – A Solution for Small Investors?

Last week we published an article on Private Banking and Crypto: A Perfect Match. Much of the feedback we received was like this: “private banking sounds great, but I’m an average investor that doesn’t qualify for private banking. How can I find a good crypto bank?”

With the recent boom in crypto prices, crypto newbies are interested in either cashing out or jumping in. If this sounds like you – you’ll enjoy reading this article.

Here are some of the questions asked in this article:

• Can I wire money from my home bank to Binance, Bitmex etc?
• Are small offshore banks crypto friendly?

If you are in the fortunate position of recently having made 6 or 7 figures in crypto, you can read this article for educational purposes but for real solutions you should jump to our Private Banking and Crypto article. 

Despite its glamorous image, private banking can be accessible at lower levels than most people think. But if you are investing under a few hundred thousand dollars, maybe you need to use mainstream, retail crypto banking solutions we will discuss here.

If you are a crypto professional like a miner or a large trader, you have access to creative OTC solutions that can be set up via offshore companies and trusts, and you are welcome to contact us for a detailed analysis of your particular situation. One interesting solution for example, that we have helped many clients with recently, is to put Bitcoin mining operations into a tax-deferred trust.

First things First: Big Banks do Work with Binance and Kraken

Banking, both onshore and offshore, has become so complicated that clients have become scared of banks – even paranoid. They think that crypto and traditional banking are totally incompatible.

First, let’s clear up a misconception: most banks in most parts of the world will not give you any problems doing transfers to and from a recognized crypto trading platform like Kraken or Binance. Assuming the amounts are realistic based on your income, you really shouldn’t have a problem. 

Even if they are not explicitly crypto friendly, the big western banks like Citibank, Barclays, Bank of America, HSBC, Santander, Nordea etc do not normally block occasional transactions with crypto exchanges. Therefore they can be considered crypto-friendly in many ways.

It may be counter-intuitive, but the banks that are least crypto-friendly are actually the fintechs, challenger banks, EMI, PSPs etc. Why? Firstly because they are under more compliance scrutiny than big banks – they are desperate to maintain access to global payment systems like SWIFT and SEPA, Visa and MasterCard, for which they rely on big banks. And secondly because the ones that offer buying and selling of crypto (Revolut for example) do not want you using other exchanges for competitive reasons.

If you are an average user buying and selling small amounts of crypto with big retail banks you are unlikely to have a problem. Should you call your bank and ask?  Probably not, as that will draw attention to you and the answer might be no. We would suggest you just go ahead and do the transaction – the worst case scenario is it will fail and you will get your money back.

Are Offshore Banks Crypto Friendly?

Most smaller offshore banks first into a similar category like fintechs. If your offshore account is in a small bank that has limited correspondent banks, chances are they will not be crypto friendly.

On the other hand, most crypto liquidity providers use offshore banks for their fiat transactions, and some banks specialize in this. Liechtenstein and the Bahamas are two major crypto banking jurisdictions. However, these banks usually only work with professional investors.

Can I use a credit or debit card to buy and sell crypto?

Remember on many exchanges you can also use debit and credit cards to buy crypto. If your bank doesn’t allow transfers to exchanges, you could still try using a card and the chances are it will work.

What about getting a crypto-funded debit card? This is harder. There are some companies that offer such cards but they tend to come and go with alarming speed, or they are only available to residents of the EEA.

Cashing out Bitcoin:  Proving SOF is Easy

Banks will often ask for proof of the source of funds of transactions. 

Another myth regarding crypto is that it is all anonymous. In fact, all crypto transactions are on public blockchains. Therefore they are very easy to verify.

If you invested in such-and-such a coin and the price skyrocketed, that is a completely legitimate source of funds and should be easy to prove.

You might be liable to tax on it, but taxation and residence are outside the scope of this article. Again, you can contact our portal’s experts for a consultation on those topics if you are interested. The offshore trust has proven an ideal vehicle for many crypto investors and day traders.

What if your local bank is not crypto friendly?

It may be that you are 100% sure that your local bank is decidedly crypto unfriendly.  Or perhaps you live in one of the many parts of the world where you are subject to currency controls.

In this case, don’t despair: there are many ways to buy and sell smaller amounts of crypto outside the banking system. Consider Bitcoin ATMs, kiosks, or just ask around in the local money-changing community. Shops that deal with immigrants (Western Union agencies, phonecard stores etc) will often serve as informal crypto exchanges. 

LocalBitcoins.com is another route you could consider, or try Airtm.com. Airtm is a peer-to-peer e-wallet, meaning that banking transactions just go between personal accounts and allow you to buy and sell almost any currency. It is Latin America focused, but not restricted – you can sign up from anywhere in the world. Unfortunately it is quite expensive to use. But it’s a very neat idea and is ideal for some people.

Fintech Crypto-Banking Solutions in Europe

One of the newer solutions in Europe revolves around creating dedicated IBANs in the client name on the crypto platform. ClearJunction, for example, is a UK-based EMI that offers this service to various crypto exchanges. 

The result is that when wiring money in, you will be wiring to an account where the beneficiary name is your own, but the funds immediately appear in your account on the crypto exchange. When you want to cash out, your name will appear as sender.

Although you can’t typically send and receive bank transfers from third parties, you don’t need to – transfers to and from your own accounts are not subject to strict compliance review.

ClearJunction don’t open accounts directly for individual users, as they are a B2B platform. However, a variation on this theme is simply to open an account in the same bank that the crypto exchange uses. For example, Kraken uses Bank Frick in Liechtenstein (see Kraken Article on Bank Frick here).

Here are Offshore Pro Group we are pleased to support you in opening accounts at Bank Frick. Bank Frick is one of the many banks we work with that are crypto-friendly and open accounts for larger clients and for blockchain businesses. The cost of opening an account at Bank Frick varies according to the business model (amount of transactions, custodian assets, risk classification, etc.), and you can always contact us for a quotation.

Cashing out directly from Binance or use Paxos

Binance is the dominant platform for altcoins and even for trading BTC, so we use it as an example. However the same applies to most other platforms too, including Bitmex.

Withdrawal options of fiat currency directly from Binance are limited – by design. Binance doesn’t want to get involved in banking. They therefore work with third parties.

Currently, fiat withdrawal options include EUR and GBP transfer via ClearJunction, Advcash and Atena, and USD wires from Silvergate Bank, the number one crypto-friendly bank in the US. These options change frequently and can vary depending on the country and currency of your account.

Another good option, however, is to open an account on Paxos. Paxos is a regulated trust company in New York state that in turn uses Silvergate Bank. Whilst it is quite hard to open an account directly at Silvergate Bank, it is easy to open an account online at Paxos from almost any country of the world. Personal accounts are typically approved within an hour or two. 

Paxos not only partners with Binance for its stablecoin BUSD, but is also partnered with other large players such as Revolut and PayPal. You can easily transfer your BUSD back and forth between Paxos and finance, and with Paxos you can send and receive SWIFT transfers from all over the world using their connection with Silvergate Bank. Paxos opens both corporate and personal accounts and is “offshore friendly.” 

How We Can Help You

As you might already have guessed, at Offshore Pro Group, we have relationships with many banks and EMIs that can facilitate crypto transactions. We can’t publicly name these banks because they don’t want to advertise themselves as crypto-friendly banks. They open accounts based on recommendations and personal relationships.

If you are a smaller investor, the cost of our services may not be worthwhile. We hope the solutions above presented free of charge will be useful to you, and that when you have traded up to a larger amount you will come back to us for personalized professional assistance. We can help you with a complete package: for example an offshore trust with an account in a crypto-friendly private bank. If you find any other good crypto-friendly banking solutions, please share them on our social media!