Since the unfortunate demise of long-term crypto-friendly banks like Silvergate and Signature Bank earlier this year, the crypto community has desperately needed reliable banking services.
Traditional banks still have a bone to pick with cryptocurrency as an asset class. Drawing a line in the sand, some have closed bank accounts simply because account holders have deposited funds to a cryptocurrency exchange.
Financial institutions are slowly warming to blockchain technology and the crypto industry despite this. Conversely, crypto companies need trustworthy banking systems that support their needs and store their fiat currency holdings.
But hang on; I thought the whole point of Bitcoin (BTC) was that we no longer need banks!
In theory, yes. However, while this might be the case for maxis, the reality is that crypto assets and traditional financial services will continue to co-exist for the foreseeable future. Having a crypto-friendly bank makes it easier to off-ramp digital assets when you want to exit the market.
What Makes a Bank Crypto-Friendly?
As the name would suggest, crypto-friendly banks are much more welcoming and supportive of digital currencies and crypto businesses. They might offer crypto trading services or support integration with crypto exchanges like Binance or Kraken.
But thatâs just the tip of the iceberg. Some forward-thinking banks are building a name for themselves in the crypto space by offering insurance for crypto businesses. Some Bitcoin-friendly banks offer credit and debit cards that give you cashback on purchases paid in BTC.
Pros and Cons of Crypto-Friendly Banks
Before diving into our list of the best crypto-friendly banks available, letâs quickly review their pros and cons.
Pros
They make crypto easy â The crypto space can be complicated and intimidating for the uninitiated. While self-custody is a fundamental pillar of blockchain technology, itâs not for everyone. Crypto-friendly banks can expose customers to the industry from the comfort of familiar banking systems.
Stress-free off-ramping â Traditional banks are often restrictive when the time comes to withdraw fiat currency to your bank account via a cryptocurrency exchange. Crypto-friendly banks make exiting the market easier and realize your profits (or losses).
Support crypto firms and startups â Crypto businesses still need a presence in traditional finance for insurance and operating costs. The best crypto-friendly banks provide blockchain and fintech companies with everything they need to stay compliant in âthe real world.â
Mobile apps â The crypto market never sleeps, so accessing your account while on the go is important. Most crypto-friendly banks have intuitive mobile apps available on Android and iOS that make it easy to track the market in real time and make moves quickly.
Cons
Historically unreliable â The unfortunate truth is that crypto-friendly banks generally have high exposure to volatile digital assets. This puts their reserves under strain, which can end in bankruptcies and insolvencies, as weâve seen with Silvergate and Signature Bank.
High fees on crypto transactions â Crypto-friendly banks are designed to make cryptocurrency easier. This service means they charge a premium on crypto-related services and are generally more expensive than what you would pay using your own crypto wallet. Fewer options than DeFi â The functionality of a crypto-friendly bank account is rather limited beyond cryptocurrency trading and HODLing. The DeFi space offers far more utility and empowers users to put their funds to use in infinitely more ways, including staking, yield farming, and lending.
Top Crypto-Friendly Banks
If youâre looking for the best crypto-friendly bank to join in 2023, youâre in the right place! This list breaks down some of the top banks for cryptocurrency from a variety of fields, including traditional banking, business banking, and personal accounts.
On the Flipside
While the best crypto-friendly banks offer a wealth of great features, the realm of opportunities presented in DeFi is far more widespread. Letâs not forget that cryptocurrency was invented to give people greater control over their finances through self-custody.
While crypto-friendly banks are unlikely to deny you access to your funds, itâs important never to forget the mantra: âNot your keys, not your crypto.â
Why This Matters
Crypto-friendly banks help make digital assets more accessible and do wonders for mass adoption and industry growth. Figuring out which crypto-friendly banks align with your needs can also help you earn crypto through cash-back payments or grow your crypto business,
