Cryptocurrency Accounts Explained
Cryptocurrencies have got the entire financial industry on its toes. They are digital currencies utilizing blockchain technology. They are virtually impossible to counterfeit and provide additional financial privacy. Buying cryptocurrencies with a credit card is what most individuals do. However, many banks discovered that, due to the volatility of cryptocurrencies, purchases of cryptocurrencies via a credit card leaves banks in a tough position. The currency often doesn’t have enough value to cover the repayment resulting in a chargeback.
The banking sector reacted with US banks leading the initiative of charging cash advance fees when clients use credit cards to purchase cryptocurrencies. Another solution emerged – to buy cryptocurrencies by initiating bank account transfers. The fees are significantly lower. However, a standard bank account doesn’t accept crypto. You still need to store it in a digital or cold wallet.
Crypto Bank Account as a Solution
The solution came in the form of crypto bank accounts. Individuals and investors can now open crypto bank accounts at some banks. Why is it a huge thing? Crypto bank accounts appear as traditional bank accounts, but only on the surface. Unlike traditional bank accounts, holders of crypto bank accounts can use them to accept cryptocurrencies. It doesn’t matter whether it is a source of income or wealth. As a crypto bank account holder, you will be able to transfer cryptocurrencies to and from crypto exchanges. At some banks, you will even be able to convert crypto into fiat currencies directly.
Crypto bank accounts are tailored to tackle the challenges individuals, businesses, and crypto investors face with the current financial services. With one of these accounts, individuals and companies can stay on top of their finances without juggling several financial services at once. It enables everyone with a cryptocurrency to securely store their funds in a centralized location and use cryptocurrencies at their own accord. Whether you want to instantly convert crypto to fiat to pay a bill, use a crypto debit card for a purchase, or cover a balance on your credit card, you will be able to do it via a crypto bank account.
What are Cryptocurrency Account Drawbacks
Finally, you should be aware of the few challenges the crypto banking sector is facing at the moment:
- Regulation issues. Some countries have stricter crypto-related regulations than others. The country of your residence or the country where your business is incorporated also plays a vital role as banks use this information to assess whether you are a low or high-risk client.
- The source of funds. In most cases, the bank will ask you to prove the source of funds.