Why Banks Still Refuse to Open Accounts for Licensed Crypto Payment Projects

Author: Shao Jiadian

A crypto payment company has finally completed its license application and is now preparing to connect with banks to open corporate accounts, receive customer fiat, and initiate settlements between stablecoins and traditional currencies.

The license documents, company registration certificates, and information about directors and shareholders are all ready, and the business plan seems to have no obvious issues. However, during the bank's due diligence process, questions suddenly arose: From which countries do the customers mainly come? Where did the stablecoins initially enter the platform? Who controls the customer wallets? Who ultimately receives the exchanged euros? If the transaction involves third-party wallets, how can the company prove the source of funds and handle abnormal transactions?

The project team then realized that while regulatory authorities had allowed them to operate, banks might not be willing to let funds enter their account systems.

This is not a phenomenon unique to the crypto payment industry, but in businesses that involve on-chain assets, cross-border funds, and multiple service entities, the issues become more pronounced.

The license addresses whether a company can legally provide specific financial services, while opening a bank account addresses whether the bank is willing and able to compliantly take on the business and its transaction risks. The two are related but are never the same approval process.

For crypto payment projects truly prepared for long-term operation, obtaining a license is just the first step. Whether they can establish stable and sustainable banking and payment partnerships ultimately determines whether the business can truly take off.

01 Why Can Banks Still Refuse Even After Regulatory Approval?

The most common misunderstanding about the project is: Since the regulatory authorities have already reviewed the company, why do banks need to review it again?

The reason lies in the different responsibilities borne by both parties.

During the licensing process, regulatory authorities primarily assess whether the company meets the market access conditions for the corresponding financial activities. For example, a CASP needs to prove that it has the governance, prudent resources, customer asset protection, and ongoing compliance capabilities required to provide approved crypto asset services; payment institutions must meet the corresponding regulatory requirements for payment services.

However, banks face a different specific business relationship.

When banks open accounts for crypto payment companies, receive funds, execute payments, or provide settlement services, they need to independently assess the anti-money laundering, sanctions, fraud, operational, and other risks associated with the customer and related transactions, and consider whether these risks can be effectively managed by their existing systems, frameworks, and risk tolerance.

In other words, regulatory authorities review:

Whether you are qualified to conduct this business.

Banks also need to determine:

Once this business enters my account and payment system, can the associated risks be effectively identified, controlled, and continuously monitored?

This distinction is particularly evident in the U.S. MSB registration issue. FinCEN explicitly states that MSB registration is not a government certification or endorsement of a company's legality, business capability, or compliance level; FinCEN itself does not issue nationwide operating licenses to businesses through MSB registration, and related activities may also involve state-level licensing requirements.

Therefore, providing a bank with an MSB registration certificate is at most just part of the regulatory identity review and cannot replace the bank's judgment on the actual business.

Even if a company has obtained more comprehensive CASP, payment institution, or other formal licenses, banks still need to complete their own customer due diligence.

02 What Banks Are Really Worried About Is Not the Use of Blockchain

Assuming a traditional cross-border payment company receives payments from corporate clients daily and then settles with overseas suppliers. Banks can usually establish due diligence logic around the payer, payee, transaction contracts, goods or services, and related cash flows.

However, if the same business incorporates stablecoins, the funding path may become: an overseas customer first pays USDC through an on-chain wallet, the platform receives it, aggregates and exchanges the assets, and then another financial institution pays euros to the merchant.

At this point, the bank may only see a fiat deposit from the exchange institution or payment partner, while the actual payer and the previous on-chain asset path are outside the bank account.

The bank then needs to further assess: Where do these funds actually come from? What transaction do the funds correspond to? Do the on-chain assets involve high-risk addresses? Does the company have the ability to identify and explain abnormal flows?

The European Banking Authority (EBA) in its 2024 guidelines on anti-money laundering risk factors for crypto assets specifically requires CASPs to identify potential money laundering and terrorist financing risks in conjunction with customer, product, service channel, and geographic risks, and proposes risk mitigation measures including on-chain analysis. The guidelines also involve other financial institutions that have business relationships with CASPs.

The FATF's previously released virtual asset risk indicators similarly focus on abnormal transaction patterns, amounts and frequencies lacking reasonable commercial explanations, sources of funds, highly anonymous transaction tools, and high-risk jurisdictions.

This means that banks do not simply view all on-chain transactions as problematic.

What banks often find difficult to accept is:

While the company can complete transactions, it cannot provide sufficient information to prove the customers, sources of funds, and commercial purposes behind the transactions.

If the project cannot clearly explain where upstream customers come from, which wallets the funds pass through, and why they need to exchange and settle cross-border, it becomes even harder for banks to take on these risks for the project.

Figure 1｜Three Core Concerns of Bank Due Diligence: License and Entity Legitimacy, Customer and On-Chain Asset Risks, Account and Fiat Settlement Risks

03 More Easily Overlooked Than "Unclear Source of Funds" Is Unclear Purpose of Accounts

Many projects only present one request when contacting banks:

"We need to open a corporate bank account."

But for banks, this description is far from sufficient.

Because even for corporate accounts, the actual purposes can vary significantly.

The first type is a company’s own funds account, primarily used to receive shareholder investments, pay employee salaries, office rent, and other operating expenses.

The second type is an operational payment account for the company, used to receive real business income and pay corresponding amounts to contractual counterparts.

The third type involves customer funds, merchant settlements, or the aggregation of funds from multiple customers. The legal relationships, fund ownership, customer fund protection requirements, and payment service attributes of such accounts may differ significantly from ordinary corporate operational accounts.

For example, a CASP needing to open an account to pay employee salaries is different from another crypto payment platform wishing to receive euros from multiple customers through one account and then pay global merchants uniformly, presenting two different business risks to the bank.

Especially in the latter scenario, banks may further focus on whether there are third-party collection and payment, commingling of customer funds, unclear actual control of accounts, or payment services that have not been fully disclosed.

Some projects believe that as long as they first deposit customer funds into a group company account and then transfer them to a payment partner, the settlement path will be easier to complete.

But from the bank's perspective, if this arrangement cannot explain the real transaction relationships, it may instead increase the risk of mismatched account purposes and actual business.

Banks need to know not just who owns the account, but also whose money is in the account and why the company has the right to receive and pay these funds.

Therefore, crypto payment projects should clarify before opening accounts whether they are applying for a corporate operational account, a business account, or a specific customer fund or settlement arrangement.

Different account needs may correspond to different types of banks and payment institutions and may require different regulatory qualifications and customer asset protection arrangements.

04 Regulators Are Supporting Compliant Crypto Businesses, But It Doesn’t Mean Banks Must Open Accounts Unconditionally

From the perspective of international regulatory trends, understanding "banks refusing crypto" as a universal, fixed regulatory ban is no longer accurate.

In March 2025, the U.S. FDIC lifted the previous requirement for prior notice regarding crypto-related activities conducted by banks under its supervision, clarifying that banks can engage in permitted crypto asset-related businesses as long as they comply with applicable laws and effectively manage risks, without needing special FDIC approval solely because they involve crypto assets.

In April of the same year, the FDIC and the Federal Reserve also withdrew two previous joint statements regarding risks associated with crypto assets, emphasizing that banks can provide related services as long as they meet safety and soundness requirements and applicable legal standards.

However, this change does not mean that all banks must accept crypto payment companies, nor does it mean that banks can lower anti-money laundering and account management requirements.

The EU EBA also opposes excessive de-risking without sufficient justification. Its 2023 guidelines emphasize that financial institutions should adopt a risk-based approach and should not refuse to provide services solely because a certain type of customer poses potential risks without reasonable analysis.

The Hong Kong Monetary Authority also emphasized in its 2023 circular regarding corporate banking services that banks should implement customer due diligence proportional to the risks when opening accounts and promote reasonable access to banking services.

These regulatory directions collectively indicate one thing:

Crypto businesses should not be simply equated with unacceptable risks, but banks still have the responsibility to identify and manage specific customer and transaction risks.

Therefore, if a project encounters a bank refusal, it should not immediately conclude that "local regulations prohibit crypto business," nor should it conversely believe that "regulators have supported crypto, so banks have no reason to refuse."

A more realistic approach is to first confirm whether the issues stem from the business scope, customer and fund transparency, the bank's internal risk policies, or whether the existing materials cannot support the bank's due diligence.

05 Which Crypto Payment Projects Are More Likely to Get Stuck at This Bank Hurdle?

In actual business structures, there are several scenarios that are particularly worth assessing in advance.

The first type involves platforms that serve a large number of third-party customers but lack a clear customer and fund penetration mechanism. For example, a company claims to only conduct stablecoin settlements, but its actual customers include multiple layers of agents, distributors, or other payment service providers, making it difficult for banks to confirm the ultimate payer, payee, and the true purpose of the transaction.

The second type involves projects with complex sources of on-chain assets. Particularly when involving a large number of self-custodied wallets, OTC transactions, multiple liquidity providers, or cross-chain asset transfers, banks may require companies to prove their effective KYT, risk screening, and abnormal transaction handling capabilities, rather than just providing a generic AML framework.

The third type involves projects where the group entity and account purpose are inconsistent. For example, a licensed entity is in the EU, but customer contracts are signed by an offshore company, stablecoins are controlled by another company, and ultimately the bank is asked to receive all settlement funds for a company that has no direct customer relationship.

These structures do not necessarily imply illegality or inability to open accounts, but if there is a lack of reasonable contracts, authorizations, and explanations of fund flows, banks will find it challenging to assess the actual business and corresponding risks of the accounts.

Another often-overlooked category: when a project obtains a license, the product is still just stablecoin exchange, but when applying for an account, it is already preparing to add wallet custody, merchant acquiring, cross-border remittance, or other new functions. If the current business plan differs from the original authorization scope, customer agreements, or application materials, it will also increase the difficulty of the bank's due diligence.

What banks fear most is not necessarily the complexity of the business, but that the degree of complexity has exceeded the company's own management and explanatory capabilities.

06 Before Opening an Account, At Least Prepare These Six Questions Clearly

Rather than waiting for banks to continually request additional materials, it is better to review the project from the bank's perspective before formally contacting them.

Figure 2｜Six Questions the Project Should Answer Before Contacting Banks

These six questions do not mean that all banks will require materials in the same format; the specific review content still depends on local regulations, bank policies, and account functions.

However, for crypto payment projects, if they cannot clearly answer these six items, banks are likely to require repeated supplementary due diligence materials.

Especially the "On-Chain and Off-Chain Fund Path Diagram" should accurately reflect the relationships between customers, wallets, CASPs, trading and exchange service providers, PIs/EMIs, banks, and merchants.

If there are multiple asset transfers on-chain, it should further explain which wallets are controlled by the project, which belong to customers, which are managed by licensed partners, and at which node the stablecoin and fiat currency exchanges occur.

Figure 3｜Checklist of Due Diligence Materials Corresponding to Six Questions

07 After Being Refused by the Bank, What Should the Project Change First?

After a bank refuses to open an account, many projects' first reaction is to switch to another bank or find another intermediary that can provide an account.

However, if the original issues stem from unclear funding paths, customer types exceeding risk tolerance, or mismatched account purposes, simply changing banks may not be effective.

The truly reasonable order of handling should first distinguish the reasons for the refusal.

If the bank clearly states it will not undertake a certain type of business, a reassessment can be made to see if there are other institutions with corresponding service capabilities and risk preferences.

If the issue is insufficient materials, then business proofs, customer structures, funding paths, licensed partnership relationships, and risk control documents should be supplemented.

If the bank finds that the project's actual business does not match the license or cooperation agreement, then business arrangements should be prioritized for adjustment rather than changing the description in the account opening materials.

It is particularly important to avoid actions such as concealing the source of crypto assets to obtain an account, borrowing unrelated company accounts, using personal accounts to handle customer funds, or packaging real customer payment businesses as ordinary trade payments.

These practices may further escalate account opening issues that could have been resolved through business adjustments into account usage, anti-money laundering, or even other legal risks.

If the project is indeed temporarily unsuitable for directly establishing banking settlement capabilities, it can also legally assess arrangements for cooperation with PIs, EMIs, or other financial institutions, but the premise remains that the partners have corresponding service permissions and genuinely bear the relevant business and regulatory responsibilities.

Licensed cooperation is a choice of business structure, not a shortcut to bypass bank due diligence.

08 How Do We Typically Support Such Projects?

For projects that have obtained CASP, MSB, VASP, or other relevant regulatory identities but still face obstacles in bank account opening and settlement, the first step is usually not to immediately contact more banks but to recheck whether the business model and account purposes match.

We will form diagnostic opinions around the company's regulatory identity, actual customer regions, product functions, group structures, on-chain asset control, and fiat settlement arrangements, first distinguishing whether the issues stem from the scope of permissions, customer structures, funding paths, or the bank's own risk policies.

For stablecoin payments, PayFi, and corporate cross-border settlement projects, we can further assist in sorting out the on-chain and off-chain fund path diagrams, analyzing bank account purposes and fund ownership, and clarifying the legal relationships between account holders and actual customers.

Once entering the institutional docking phase, it is necessary to prepare a due diligence materials package for banks and payment institutions based on their specific requirements, including product business descriptions, scope of permissions, AML/KYC/KYT frameworks, on-chain transaction monitoring, sanctions screening, and transaction anomaly handling mechanisms.

If multiple licensed institutions are involved, it is also necessary to verify which businesses are covered by CASPs, PIs/EMIs, banks, and other partners, and whether the relevant contracts are consistent with the actual flow of funds.

Figure 4｜Three-Stage Path from License to Bank Account

Conclusion: Licenses Allow Projects to Operate, Bank Accounts Determine Whether Businesses Can Run

For crypto payment projects, licenses, bank accounts, and funding paths are not three unrelated matters.

Licenses prove that a company has the regulatory qualifications for specific businesses, bank accounts undertake the real fiat receipt and settlement functions, while funding paths connect customers, digital assets, licensed institutions, and final payees.

Any issue in one link will affect the actual operation of the business.

The regulatory environment is providing a clearer path for compliant digital asset businesses, but this does not mean that banks can ignore customer due diligence, sources of funds, and ongoing risk management.

Therefore, projects should not wait until they obtain the license to start looking for banks, designing accounts, and explaining funding paths.

The ideal state is to answer who will open accounts, how funds will enter the banking system, and how this payment chain will be understood and accepted by financial institutions simultaneously when planning the first license.

Returning to the title:

Why have crypto payment projects obtained licenses, yet banks still refuse to open accounts?

Because what banks need to confirm is never just whether the company is qualified to do this business.

More importantly:

Whether every penny generated by this business can be clearly seen, managed, and continuously bear the corresponding risks by the bank.

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