We went undercover to try and open accounts at four of the largest U.S. banks, telling them ahead of time that we would use the account to buy and sell Bitcoin on Coinbase. The verdict is in—personal accounts are at risk of being closed, and accounts for cryptocurrency-related businesses are outright prohibited. Here are some solutions.
We went to four leading U.S. banks and two credit unions to determine their receptiveness to doing business with cryptocurrency users. Posing as a customer, we tried to open an account for depositing wages earned in Bitcoin, converted via Coinbase. We then inquired whether the account was at risk of closure based on each bank’s risk management policies.
Afterward, we looked into the possibility of opening an account for a fictitious Seattle-based business, CryptoMedia. The business would sometimes send and receive payments in Bitcoin but would have no other direct involvement with crypto.
Of the six banks we visited, U.S. Bank was the most hostile toward opening an account that deals in cryptocurrency. The junior banker was unable, or unwilling, to answer more nuanced questions about the bank’s risk management policies.
Immediately after mentioning cryptocurrency the banker escalated the issue to management. Several phone calls later, the banker stated that opening a personal account that interacts with a cryptocurrency exchange would mark the account as high risk and would be at a “substantial” risk of being closed.
Any business remotely involving cryptocurrency is strictly prohibited based on the bank’s policies. This means businesses involving mining, media, and even marketing cannot open an account at U.S. Bank.
At least four other customers reported having their accounts closed after U.S. Bank identified these customers’ involvement with cryptocurrency.
Bank of America
Bank of America was the most helpful in answering questions about opening an account that would interact with crypto. The bank escalated the issue to upper management, and had a branch manager answer questions in-person. Unlike other bankers we talked to, this manager had a much more nuanced understanding of the regulations the bank was subject to.
First, inquiries about the risk of account closure were escalated to three different departments of risk management during the meeting. The calls took over an hour and all three yielded inconclusive results. The manager did reveal the following documents about the bank’s internal compliance policies, written as follows:
“Cryptocurrency exchanges or digital currency exchanges (DCE) are businesses that allow customers to trade cryptocurrencies, virtual or digital currencies, for other assets.
“Cryptocurrencies present inherent risks including speculative and volatile asset values. Transactions involving cryptocurrency may exhibit a lack of transparency in the end-to-end movement of funds.”
Keywords that will flag an account as high risk:
“Do not open accounts for cryptocurrency exchanges or businesses whose primary business is the trading of, or investment in, cryptocurrency, virtual currency, or digital currency whether as agent or principal.”
Even after escalating the issue, the manager was unable to confirm that the personal account would not be closed. Instead, the banker recommended opening an account at a smaller bank and then transferring funds to break the link between the cryptocurrency exchange and the account, consequently reducing the risk of account closure.
Bank of America’s stance was consistent with customer reports of account closures. We identified five instances where a customer reported their account was closed for interacting with cryptocurrency.
Initially, the assistant branch manager said that Wells Fargo would not open a personal account that has any connection to cryptocurrency. However, when pressed, the banker escalated the issue to upper management for clarification.
Several phone calls later the Wells Fargo representative said that opening an account that “transacts directly to and from Coinbase would probably be okay, but I can’t promise it won’t get closed.”
Phone calls to upper management appeared to be unhelpful, with their compliance team unable to articulate the bank’s stance on cryptocurrency for personal accounts (in line with the other three banks).
Ultimately, the manager was unable to answer any questions related to the bank’s compliance policies, or even answer questions about opening a personal account that “does business with Bitcoin.” Furthermore, the assistant branch manager demanded that we come back tomorrow, “at the earliest,” before opening an account in order to double-check with management.
For business accounts though, Wells Fargo’s policy is clear: Anything cryptocurrency-related is outright prohibited, according to the banker. Compared to other banks Wells Fargo and its internal compliance documents seem ill-equipped to handle customers who deal in crypto.
Of the four major banks, the “personal banker” at Chase was the quickest at answering questions on Chase’s compliance policies. The banker revealed the (quite terse) internal compliance guidelines on crypto to CryptoSlate:
“Opening a cryptocurrency account for businesses is prohibited.”
The guideline had one bullet-point, simply citing “Bitcoin.” In contrast, other prohibited activities, such as those related to marijuana and gambling, had at least four or more points with corresponding guidance.
That said, the banker said they could open an account immediately, but was uncertain, even after calling the Chase risk management team, whether the account would get flagged.
“The compliance team monitors all account activity, so there’s still the potential your account gets closed,” the banker said.
We found five reports of customers claiming to have their accounts closed for transacting in Bitcoin or cryptocurrency.
Major banks don’t know what to do about cryptocurrency
Interactions from these four major bank branches indicate that none of the mainstream banks have a clear stance toward customers who personally use cryptocurrency. Even then, from the evidence gathered, these banks have draconian policies toward crypto users, flagging them as “high risk.”
Owning and transacting in Bitcoin in the United States is legal. Entities such as Coinbase also comply with U.S. know-your-customer and anti-money laundering regulations. Nevertheless, the major banks still have unfavorable policies toward crypto-users, and are outright hostile toward crypto-businesses.
Credit unions receptive to Bitcoin
In addition to visiting these four major U.S. banks, we also attempted to open accounts at Boeing Employee Credit Union and Washington State Employee Credit Union.
Because credit unions are much smaller than traditional banks, and often operated as not-for-profits, they are governed by much more lenient state and federal regulations. Consequently, they tend to have much more relaxed risk management departments. We hypothesized they would be more receptive to Bitcoin and crypto than their larger counterparts.
Our in-branch visits confirmed our hypothesis. Both banks confirmed with their compliance teams that they do not have a stance for or against Bitcoin or cryptocurrency. Not only were we able to open personal accounts at both banks successfully, but BECU and WSECU were willing to also open accounts for crypto-businesses—which all four of the major banks prohibit.
Compelled to act
Bitcoin was unleashed 10 years ago. Now, the idea that cryptocurrency is a wise investment is penetrating the mainstream. In a July Bankrate survey, 4 percent of Americans (and 9 percent of millenials) indicated that BTC and cryptocurrency “would be the best investment” if the money wasn’t needed for 10 or more years.
It seems traditional financial insitutitions have yet to catch up with changing customer preferences. If the number of Americans using BTC continues to grow then the big banks will be compelled to take a stance.