Banks Handcuff Bitcoin Businesses in Opening Bank Accounts

April 13, 2015 7:32 AM UTC

Opening a Bitcoin business is not an easy endeavor. You have to know how Bitcoin works, have a way of getting paid in bitcoin, and have a way of paying taxes for your bitcoin transactions. You have to find bitcoin consumers of your goods and services, which is not a massive pool to swim in. And you’ll need banking services. This might be the toughest part of your journey to becoming a future Bitcoin business mogul. Expect to find many torches and pitchforks held in your path to mainstream legitimacy.

Bitcoin Bank Account tougher than a Marijuana Bank Account

Having previously worked in banking on Wall Street, I know first-hand that regulations and compliance are kings in the established banking industry. If there are no clear regulations, that’s a red flag, and nothing gets done out of fear of the unknown. If there are too many regulations, things get done, just very slowly. Banks are like children. You have to tell them exactly how to do things, down to the smallest detail, or else it never gets done. And with the government, influential corporations, and central banking elite setting the regulations, industries like cannabis and Bitcoin are swimming upstream. High-risk assessment scores, more regs, and plenty of bad mainstream press will put you behind the 8-ball. American Banker spoke to those working with banks and Bitcoin to see what the issues are that affect new Bitcoin businesses today.

There are “a lot of parallels between the marijuana-banking space and the crypto-banking space,” said Andrew Ittleman, an attorney at Fuerst, Ittleman, David & Joseph told American Banker. “Banks are trying to pick up fee revenue any way they can, and they’re now seeing some of these fringe businesses as being desperate and willing to pay virtually anything to get an account.”

Surprisingly, starting a bank account in a Marijuana-related business is usually easier than working within the Bitcoin space, at least within the United States. While an average business can get an account for $100 a month or less, plus initial deposit, one in the cannabis industry often sees fees increased into the thousands, based on their risk assessment. Bitcoin business monthly account costs can commonly start in the thousands, as they now have the highest risk assessment (see exchange risk.)

“For any [money-service business] or money transmitter, banks incur overhead costs for onboarding, screening, and closer transaction monitoring. Those costs are passed on to the [money-service business] customer, based on the nature of their business,” Silicon Valley Bank spokeswoman Carrie Merritt


Also read: U.S. Regulators Battle Bitcoin Businesses for Control

Traditional banks have a lot of leverage in these situations, with few banks working with these companies at all. Less competition always means higher costs of doing business for the consumer. The small pool of banks can name their price. There may be one bank in your area that will even talk to you. There may be none. The few banks that are willing to do business see it as a nice way to make a juicy profit. Banks live off of fees and interest rates of their customers, the more, the better. And they’re always looking for new and creative ways to charge consumers. It doesn’t get any more or any better in the profiteering department than a Bitcoin business for a banker.

“I’ve dealt with many banks over the years that are willing to take some risk. Say, to bank a money services or remittances company, but they’re not going to do Bitcoin,” said Judy Rinearson of the law firm Bryan Cave.

This is not indigenous to the U.S., a generally liberal Bitcoin market. We have reported that China has made opening a Bitcoin bank account very hard through more direct means. The People Bank of China is owned directly by the government, so the government has a more direct hand in who gets accounts and who does not.

Personally, I believe that every industry that appears in the mainstream for fiat currency should be created in the Bitcoin community. You may need to build your organization online in a jurisdiction that is more indifferent than one that is anti-competition for the establishment like regulators are in the United States. People are trained to believe they have to have a traditional bank account to do business domestically, and that may not be the case. Look into working with Bitcoin financial companies like Circle to help with your Bitcoin finances. Support companies in the Bitcoin community that are trying to give you an option within Bitcoin. IMO, Bitcoin should run parallel to the establishment, and use the successful establishment’s history as a model for future growth within Bitcoin. Merging commercial banking services and Bitcoin directly is not recommended.

You can do it, but you will pay a hefty price, and is it worth it? Think about keeping it in the family.

How would you finance your own Bitcoin business, and handle the accounting? Share above and comment below.

Last modified: August 6, 2020 7:01 PM UTC


Evander Smart wants to get you talking, get you thinking, get you learning about Bitcoin, "The Future of Money". He has two Bitcoin video training courses on called "Bitcoin for Beginners". Go to to get the latest on Evander and the latest Bitcoin news.