Some Observations on Access to Banking for Estonia Crypto License Holders

Crypto Wallet and Crypto Exchange license holders from Estonia are struggling to find access to banking. It seems the only way to get access to banking is via EMIs and they too have started to decline accounts and those lucky enough to have accounts are being charged an arm and a leg, not to mention limited accessibility (i.e. very rare to have SWIFT access, etc.)

So why is all this happening? This video gives a little bit of insight into why and how we can help.

Transcript

Hello. My name is Faisal Khan. I am a banking and payment consultant. Of late we’ve been contacted by a lot of companies who are based in Estonia and have taken an Estonian exchange license, a crypto exchange license or a wallet license and are finding it extremely difficult to get banking. So perhaps I thought I’d make a video and maybe explain a little why this is happening.

So Estonian license really doesn’t count. As far as the rest of Europe is concerned or the rest of the world is concerned, they really don’t care about that license. They don’t even give a sort of any preference to it. It’s a license that you can go pay a couple of thousand euros for maybe I think it’s 3000 or 4000 euros and you can pick up a license and people have picked up by the thousands. So I think they have issued something like four to seven thousand licenses. I’m not sure of the number, but the number is huge. This is compared to, let’s say that an SPI license or an API license or an e-money license, which cost, you know, 20,000 euros, 30,000, 50,000 euros, 350,000 euros and require a lot of due diligence. a long elongated process. The Estonian license, basically you pay the money, you do a little bit of paperwork and you get the license. So it’s not given much weightage as far as the international banking community is concerned.

So how are people who have the exchange licenses getting banking? Well, they’re going to the EMI. So regular e-money institutions and they’re being charged an arm and a leg because the regular banks, just like I said, they don’t, they don’t view this as a license. The regular EMIs charge you on sometimes 1 percent on funds coming in, 1 percent from funds leaving out and they can get away with this. Some people call it highway robbery. I would agree. But, you know, the fact of the matter is that’s what the EMI is in business for. They have made it. They have convinced their banks that they will take on crypto clients. They will make sure that the due diligence is good, they would make sure that the business model is good, and then they will basically be taking the ultimate responsibility of that client. So EMIs are obviously making money on this thing.

So how can an Estonian company that has a crypto wallet and an exchange license get banked? Well, I think first thing you have to understand a little bit of what’s happening in Estonia. Because of what this you know, they have money laundering issues that they had to the tune of 230 billion dollars from one single branch of this Scandinavian bank. I think the repercussions are yet to hit in. I think the sanctions or the penalties that the U.S. will throw at them have yet to come. And I think they will come and they will come and they will come at a pretty they’ll pack a punch. And also, I think Estonia is going to pay the price for that.

And I think the second thing is that the regulator is now going to a revisiting process, they’re growing through all the licenses that they have issued, these so-called crypto licenses. And now are asking you, do you have a compliance program? Can you enhance your compliance program? Can you put the travel rule into it? Can you look at the FATF guidelines? And I think they’re going to have to weed through it all and take a lot of these licenses out because they’re just not doing anything. And if Estonia wants to survive as a bonafide serious financial regulator, I think they’re going to have to cull a lot of the licenses that they have out there.

Lithuania, on the other hand, has made it very clear because of the competition of, you know, Lithuania and Estonia, Lithuania has made it very clear to all the EMIs that, you know, we really don’t like crypto. It’s a very subtle way of saying we really especially don’t like the crypto that’s coming in from Estonia. So a lot of the EMIs in Lithuania are now also sort of, you know, seeing that the banking facilities vis-a-vis the crypto area is being withdrawn.

2018 – there used to be about a 120-130 institutions in Europe that were, let’s say, crypto-friendly. They were, they were more open to crypto. Today, that number is way less than 12. And even then, none of those twelve that I know of will work with Estonian companies directly per se. They’d rather prefer to work with EMIs, etc, or APIs – what they call regulated entities. They don’t, they don’t consider the Estonian entities as regulated. You may have a different opinion on that, but, you know, don’t be the messenger. I mean, this is I’m just telling you the way I see it and I hear it.

So is it difficult to find banking for an exchange in Estonia? Yes, it’s very difficult. You can find out and you can, you can see people are searching from left, right and center and they are having no luck. It’s difficult, very difficult, but it’s not impossible.

If you have a decent compliance program, if your management is good, if you’re people of repute, if your product offering is something that makes sense, if there’s a decent chance that you would actually be successful in what you do, if there is a good chance in going forward with executing it rather than just keeping it as a paper tiger or a paper dream, etc., I think there’s a good chance you can get banking. It’s not easy. Like I said, it’s very difficult, but it is not impossible. A lot of the people who are holding onto tokens etc are very nefarious or dubious business plans probably won’t qualify. But banking is becoming more and more difficult and I think you will… I think it’s going to get worse before it even gets better.

So in the end, all I will say is if you are legitimate, a legitimate bonafide business in the eyes of the banks, not in my opinion, but in the eyes of the bank, I think there is a fair chance that you can get banking – doesn’t have to be in Europe, could be offshore, could be in the United States, could be Canada, could be at other places, you know, Singapore, Hong Kong, Japan, Korea. But it is going to be difficult. You are going to have to really revamp your game up to show that you are responsible, semi or quasi regulated financial entity and that you will behave as per the market rules.

If you are interested in having a bank account and having a talk with us, there’s a contact form, fit it out below, it’s in the description, and we’ll have a chat. Till next time, have a good one.

Transcript End

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