The demand for offshore cryptocurrency accounts has exploded in 2018. Likewise, the demand for offshore bank licenses and correspondent accounts has increased dramatically. In 2016 I got a call a month asking about cryptocurrency banks for sale. Now we get a call a day asking for an international crypto friendly banks for sale. 2018 is shaping up to be the year for offshore bank licensing.
Why the increase in demand? With countries like the United States and China pushing out cryptocurrency exchanges and crypto traders, the demand for offshore banks has increased dramatically. If an offshore bank has US and EU correspondent accounts that allow funds to flow in and from crypto, that bank has a gold mine.
And the same goes for ICOs. They’ve been forced out of the United States, which means an offshore bank is a perfect vehicle to act as the investment bank and issue an international ICO. See: The Best ICOs for 2018.
Wanting to cash in on this new attention, a few of cryptocurrency banks are for sale. If you’re operating a crypto exchange, an ICO platform, or are a bitcoin billionaire, you might consider buying an offshore cryptocurrency bank for sale.
- For more on the topic of setting up a new offshore bank, see my 300-page book on Amazon Kindle: Offshore Bank License Guide.
First, let me define what I mean by an “offshore” bank for sale. An offshore bank is a financial institution licensed in a zero or low tax jurisdiction. In most cases, an offshore bank can provide all manner of international banking services to persons and companies outside of its country of licensure. Conversely, it is prohibited from competing with local banks and may not offer services to locals.
The top offshore banking jurisdictions are Belize, Dominica, St. Lucia, Cayman Islands, Puerto Rico, Cook Islands, Gibraltar, and others. Banks that want to focus on the US often set up in Puerto Rico. Those who want to keep their distance from US regulators prefer Dominica and Belize. For more on this, see: The best offshore bank license jurisdictions.
Second, let me define what I mean by a “cryptocurrency” bank for sale. A cryptocurrency bank is one that has the necessary correspondent and other relationships to send and receive wires from cryptocurrency exchanges. The most important component of an offshore bank providing services to crypto clients is its correspondent banking relationships.
A crypto friendly bank is not necessarily a bank that issues its own token or one that operates on a blockchain. In fact, it may not have any FinTech components at all. The FinTech side of the equation is handled by the exchange and the offshore bank is focused on converting coins to FIAT and back again.
Third, let’s consider some of the issues that arise when you buy a cryptocurrency bank. There are two options when you buy a bank: take over an existing bank with an operating history and a book of business or buy an existing license and include correspondent banking services in the purchase.
When you buy an offshore bank that’s been operating for a few years, you buy its industry reputation and its client base. As with any major acquisition, you’ll need to audit its clients and loan portfolio. When buying an offshore bank, you must also look at its FATCA and CRS compliance to ensure you have no risk of fines from your regulators.
When you buy an offshore bank charter with new correspondent accounts, rather than an operating bank, the risk is that the correspondent banking has not been proven. In that case, you must check out the promoter and his or her experience in correspondent banking. And, of course, include such accounts in the transaction.
A few of the cryptocurrency banks for sale will accept bitcoin for 100% of the purchase price. You will need to replace the bank’s corporate capital with dollars, but the purchase can be completed in bitcoin.
Corporate capital for an offshore bank ranges from $550,000 to $10 million depending on the bank and the jurisdiction. New banks typically have $550,000 to $1 million in capital to support their license plus the amount held by their correspondent bank.
Let’s look at one cryptocurrency bank for sale.
The largest cryptocurrency bank I know of for sale has both US and European correspondent accounts which allow funds to flow in and out of crypto exchanges. Thus, it’s “crypto friendly” for multiple currencies. This bank also has a physical gold program which some investors use as a hedge against crypto volatility.
The keys to its value are:
- US and EU correspondent accounts which are crypto friendly,
- 15-year operating history and audited financials,
- Clean FATCA and CRS history,
- Relationships built over the years with regulators and correspondent partners,
- Diverse account portfolio with thousands of customers not heavy on crypto,
- Moderately profitable in 2017,
- Sellers are willing to take back the loan book if required,
- Supports US Dollar, Canadian Dollar, Euro, Pound Sterling and Swiss Francs,
- Gold purchase and loan programs popular with crypto investors, and
- Willing to accept bitcoin for the purchase price.
The purchase price of this offshore bank is $100 million or about 12,000 bitcoin at today’s exchange rate.
By comparison, the cost of a new offshore bank for sale is about $10 million or 1,200 bitcoin. Such a bank would include the permit to organize, permit to operate, compliance, AML and KYC documentation, and correspondent relationships. The buyer would need to install his or her core banking software and connect into the correspondent banks.
The purchase of an offshore cryptocurrency bank is essentially the acquisition of a turn-key operation. Once you install your people and systems, you can begin offering services. This will save you 6 to 12 months compared to starting from scratch and eliminates all of the risks and hurdles of building an offshore crypto friendly bank.
Keep in mind that each and every shareholder will need to be approved by government regulators. We’ll need detailed information on all shareholders, including a clean police or FBI report.
The cost to purchase a new offshore cryptocurrency bank ranges from $10 million to $20 million depending on the jurisdiction. The cost for an offshore bank with an operating history and accounts ranges from $70 million to $100 million. There are very few operating banks sold (I see 1 or 2 per annum). On average, there are 4 new operating crypto banks sold and 30 new licenses (permit to incorporate) issued each year.
Let me end with a comment on starting a new bank with an ICO. This article on cryptocurrency banks for sale is for those who have completed an ICO or have raised the necessary capital. Starting a new bank on a budget is a very different matter and no seller will negotiate with someone pre-ICO (before you can provide a proof of funds).
If you’re pre-ICO and require an offshore bank license, you’ll need to start at the beginning. That means applying for a permit to organize from an offshore jurisdiction like Dominica or Puerto Rico. Once you have the authorization to incorporate a bank in hand, you can raise capital using the term “bank” in your offer documents.
The usual cost of drafting a business plan, preparing basic compliance documents, and negotiating a license from an offshore jurisdiction is $150,000. For more on what it takes to build an offshore bank, see: Four Steps to Build an Offshore Bank.
For an article on funding an offshore bank with an Initial Coin Offering, see: How to start an offshore bank with an ICO.
I hope you’ve found this article on cryptocurrency banks for sale to be helpful. For more information on purchasing an existing offshore bank or setting up a new financial entity, please contact me at firstname.lastname@example.org or call us at (619) 550-2743.
The usual process to acquire an international bank is an initial consultation to learn about your requirements and objectives. Then we’ll need a proof of funds for $10 to $100 million and the resumes or background information on each shareholder. And, of course, we’ll need a retainer to represent you in the purchase of an offshore bank. Only when this information is provided will the offshore bank open its books to examination.