The cryptocurrency market has experienced an unprecedented explosion over the past decade, transforming traditional finance and opening up new investment opportunities. However, this revolution has not been without its challenges. Many cryptocurrency investors find themselves faced with an unexpected problem: the closure of their bank account. To better understand this phenomenon and its implications, I invite you to read my previous articles on the subject here and here.

Why Are Crypto Investors' Accounts Being Closed?

Account closures affecting crypto investors are often attributed to several factors, which can be classified into three broad categories:

  • Banking Regulation

  • The Volatility and Opacity of Digital Assets

  • A Conflict of Interest

    Banker who rules the world

Banks and Crypto ETFs: A Strategic Interest

With crypto ETFs, investors can gain exposure to cryptocurrencies without having to directly manage a portfolio of bitcoin, ether, or other digital assets. This may seem like a simpler and “safer” solution, but investors should be aware of the implications. By using ETFs, they are delegating custody of their cryptocurrencies to financial institutions, which receive management fees in return for this service.

Banks have every interest in promoting crypto ETFs because they can:

  • Charge fees (management, custody, transaction) to their clients, thus maximizing their profits.

  • Maintain control over investors' assets, which is contrary to the initial philosophy of decentralization specific to cryptocurrencies.

  • Limit direct transactions between investors and decentralized exchanges or other autonomous solutions, strengthening their position as essential mediators.

Costs and Economic Barriers

When banks promote ETFs, investors often face multiple fees, which can include:

  • Annual management fees for holding ETFs.

  • Transaction fee each time an investor buys or sells ETF shares.

  • Hidden fees related to custody and security costs of the assets underlying ETFs.

By comparison, directly managing cryptocurrencies through a personal wallet (such as a hardware or software wallet) allows investors to avoid these fees. However, bank account closures or pressure to limit crypto-related transactions create obstacles for those who wish to maintain full control of their assets.

Banker who controls and watches everything

A Strategy to Maintain Control

Banks are looking to keep a foot in the crypto ecosystem while maintaining their role as an intermediary. They would prefer users to go through their services, where they can easily apply their traditional fees. This presents a conflict of interest for crypto investors who have historically favored decentralization and the removal of intermediaries.

For investors who want to avoid these fees and maintain full control over their assets, it is essential to opt for decentralized solutions:

  • Use non-custodial wallets like MetaMask, Ledger or Trust Wallet to store their crypto directly.

  • Use decentralized exchanges (DEX) to trade cryptocurrencies, avoiding the high fees of centralized platforms.

  • Stay vigilant to regulatory changes and new banking offers to avoid being caught out by excessive fees.

Who is Affected by these Account Closures?

Account closures aren’t just affecting large companies or cryptocurrency platforms. Here are the main groups affected:

  1. Individual Investors
    Many individual investors have their accounts closed after making cryptocurrency-related transactions, whether buying or selling digital assets. Fund transfers betweenexchanges cryptoand traditional bank accounts are often perceived as risky, prompting banks to close the accounts as a precaution.

  2. Businesses in the Crypto Ecosystem
    Companies operating in the cryptocurrency space, including startups, blockchain project developers, and exchange platforms, are frequently affected by these closures. They encounter difficulties in maintaining bank accounts, which complicates their daily financial management and their relationship with traditional investors.

  3. Freelancers and Independent Workers
    With the rise of Web3 and decentralized services, many freelancers are paid in cryptocurrencies. When they seek to convert their earnings into fiat currency via their bank accounts, they may also face sudden account lockouts or closures.


What Are the Alternatives for Cryptocurrency Investors?

Deblock Bank cryptofriendly

Faced with these account closures, many players in the crypto ecosystem are turning to alternative solutions to secure their transactions and funds.

  1. Crypto Friendly Banks
    Several banks now specialize in serving cryptocurrency users. Neobanks and digital banks, such asRevolut, N26, orDeblockoffer banking services tailored to crypto investors, while respecting regulations.

  2. Stablecoins and Crypto Cards
    To bypass traditional banks, some users prefer to store their funds instablecoins(cryptocurrencies pegged to fiat currencies like USD) and usecrypto bank cardsThese cards allow you to spend digital assets directly without going through a traditional bank account.

  3. Decentralized Banks and DeFi Services
    Decentralized finance (DeFi) offers another solution to circumvent account closures. DeFi platforms allow users to transact, lend, or borrow funds without the need for a traditional bank. However, adoption of these services is still limited due to technological complexity and security risks.

Although the situation may seem blocked in the short term, the growing adoption of cryptocurrencies and pressure from regulators could force banks to review their policies. Governments and financial institutions are beginning to understand the importance of digital assets and are working to implement clearer regulations that allow for a more harmonious coexistence between traditional and crypto banks.

It is crucial for cryptocurrency investors to remain vigilant, understand their banks’ policies regarding crypto transactions, and explore alternatives to secure their funds.

Thank you for taking the time to read this article. If you found it useful or interesting, please consider sharing it, leaving a comment, and subscribing for more content on crucial updates in the blockchain world.

Disclaimer: This article does not constitute investment advice. Cryptocurrency markets are volatile and involve risks. Always do your own research before making any financial decisions.
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