Opening an account with a cryptocurrency-friendly offshore bank: what you need to know

Views on cryptocurrency differ widely from one country to another. Some nations are tightening regulations on the blockchain sector, while others support crypto startups, ease the tax burden, and legally recognize digital currencies as a means of payment. Regardless of the jurisdiction, cryptocurrency supporters encounter specific difficulties since the banking sector views crypto business as high-risk (European Central Bank standards).

The Basel Committee on Banking Supervision made a notable proposal (2021) that presupposed increasing the risk factor for cryptocurrencies to 1,250%. That means that banks must hold a fiat reserve of 12.5 times the value of their crypto assets. Therefore, one way to ensure the safety of your assets is to open an account in a country favorable to cryptocurrency.

Offshore Banking Advantages for Accounts in Cryptocurrency

In many offshore countries, cryptocurrency is used alongside fiat money to pay for various goods and services, as well as to purchase real estate. Among the main advantages of offshore crypto banking are:

• Confidentiality: Storing digital assets offshore provides a high level of protection for account holders’ personal data from transaction records.
• Assets Protection and Diversification: Offshore cryptocurrency accounts protect against various risks, including political instability, economic crises, or legal disputes. Diversifying assets across multiple jurisdictions can also reduce vulnerability to risk and provide greater resilience to market fluctuations.
• Flexible Infrastructure: In several jurisdictions, cryptocurrency, along with fiat money, is used to pay for various goods and services, including real estate.

However, there are certain risks when storing cryptocurrencies offshore. These include possible changes in legislation, liquidity issues that may make it difficult to withdraw funds, and financial risks stemming from the significant volatility of digital assets.

Top 5 Countries for Account Opening

When choosing a jurisdiction to open an offshore account, it is essential to consider the size of the start-up capital and the specifics of corporate legislation. We recommend selecting a jurisdiction with a stable political and economic environment:

• Comoros: The islands are known for their favorable tax policies, a developed legal system, and a high level of privacy. A digital bank in the city of Fomboni offers clients corporate accounts with the ability to conduct cryptocurrency transactions.
• Singapore: According to the Payment Services Law adopted in 2019, the city-state supports cryptocurrencies and blockchain technologies. The government actively invests in several projects in this area. Singapore’s status as an international financial center makes it an attractive business destination. There is no capital gains tax in the country. Personal and corporate cryptocurrency funds are also tax-exempt, meaning investors who profit from rising cryptocurrency prices do not have to pay sales tax.
• Saint Lucia: The state’s banking system is regulated by the Department of Financial Services Supervision and the Eastern Caribbean Central Bank. Multi-currency accounts and online asset management are available to clients.
• Great Britain: Businessmen from Europe and some Asian countries with ten years of experience can open a corporate account in a payment system. Clients are provided with services for transactions with ten cryptocurrencies and unique solutions that combine traditional payment services with blockchain technology.
• Kazakhstan: The Astana Financial Services Authority regulates the payment system’s activities. Clients have access to a comprehensive all-in-one approach, which includes the ability to store, send, and receive digital currency using the blockchain module and exchange it for fiat money (Law “On Digital Assets in the Republic of Kazakhstan”).

What to Look for When Choosing an Offshore Bank

Before submitting your application, you should look into the reputation and license of the financial institution, its ratings with independent agencies, and customer reviews. Important aspects include:

• Terms of service (minimum deposit, commissions, liquidity, etc.)
• Possibility of remote account opening
• Economic and political stability of the jurisdiction
• Level of protection of clients’ personal data
• Legal aspects of the jurisdiction (cryptocurrency legislation, tax nuances, and client protection procedures)
• Technological aspect (services for storing cryptocurrencies, the ability to create crypto wallets, store various types of virtual funds)
• Level and quality of service

Our experts will help you choose the best bank for storing cryptocurrencies.

How to Open an Account at an Offshore Financial Institution

You can facilitate and expedite the process of opening an offshore bank account by requesting a professional consultation. This way, you can get assistance in completing most of the formalities. The procedure of opening an offshore account consists of the following steps:

1. Selecting a bank.
2. Preparation of a package of documents following banking requirements.
3. Sending documents to a financial institution.
4. Verification by the bank of information received from a potential client (KYC procedure).

The list of required documents varies in different jurisdictions and depends on the field of business activity. However, most financial institutions typically require:

• A notarized copy of the applicant’s passport
• Proof of residential address (e.g., a utility bill)
• Confirmation of the origin of funds
• Letter of recommendation from your current bank

To open a corporate account, you may need the following documents:

• Company registration certificate
• Articles of association
• Certificate of financial well-being
• Business plan

Banks conduct a thorough analysis of each potential client, so be prepared to answer questions about:

• Purpose of opening an account
• Field of activity
• Volume of cryptocurrency transactions
• Information about partners

In addition, the bank may conduct other procedures, such as interviews with the account holder and analysis of business plans.

Conclusion

Opening an account with an offshore bank or payment system for storing and transacting with cryptocurrencies diversifies risks and ensures confidentiality. However, finding a suitable country and financial institution for your purposes requires intimate knowledge of the legal nuances of each jurisdiction. To minimize the risks of refusal to open an account and account blocking, seek help from professionals. 

Are you considering opening an offshore cryptocurrency account? Our team has the necessary knowledge and resources to assist you!