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Dubai bank account for crypto business
- Thread starter myself
- Start date
Exactly, and this gets overlooked a lot. This isn't the late 90s, 2000s, or even early 2010s anymore anymore. Bank account opening and just as importantly bank account maintenance is decided by compliance departments, not bank managers.
As long as the correspondent banks don't allow anything related to crypto, there isn't much banks in UAE can do even if they might want to. They aren't going to risk access to USD, GBP, EUR, and other major currencies just to supply banking services to a crypto company. It's the same with crypto licenses in EU. At most, licensees are able to access EUR/SEPA (the equivalent would be an AED only account in UAE). Very few have SWIFT relationships and those belong to major institutions and are heavily scrutinized.
Many fiat on/off ramps rely on back channels where the remitting bank doesn't know or has plausible deniability.
A crypto license in UAE is better than having no license. But, just like other crypto licenses, don't expect the doors to the fiat financial system to suddenly become wide open.
That's it and the truth is that you can opt for something somwhere else for maybe 10% of the cost with having the same banking possibilities -> close to none.
I didn't apply for a bank account for the company yet but I managed to open a personal account for myself. The documents I presented to the CBD
I was in Dubai a few weeks ago. I asked a teller at the NBD Business branch at the DMCC centre (Almas Tower) about the possibility of opening a bank account for a DMCC crypto trading company. His answer was that "we did not receive the go-ahead yet from NBD's management to provide accounts for crypto companies". He also said that he's seen many customers asking for the same.
I know somebody in a similar situation who called the DMCC crypto centre to ask for advice about opening a bank account for his crypto trading company. He was told that "we're working with an offshore bank to provide bank accounts to our crypto companies".
It is clear that opening a bank account for a crypto company is not as easy as opening an account for a restaurant. But with the current pace of institutional crypto adoption I hope things will change soon to the positive side. For now we have to keep trying.
My next trip in Dubai I will try to work on the bank account and see how it goes.
The problem with banks and crypto is more an issue if the firm is trying to operate as a crypto exchange and/or getting from the public (there are no licenses for that in UAE currently, though they are working on it).
One of the approved license type from DMCC is for proprietary crypto trading, which does not involve getting funds from the public or operating as an exchange. In that case, trading in crypto is not much different from trading equities. The firm would fund the broker by depositing from the bank and withdraw the trading profits back through the bank.
The main attraction for traders is that this firm is approved by DMCC to do their crypto trading, with the clarity that the profits will not be taxed, unlike in many other jurisdictions, the tax treatment is unclear.
One of the approved license type from DMCC is for proprietary crypto trading, which does not involve getting funds from the public or operating as an exchange. In that case, trading in crypto is not much different from trading equities. The firm would fund the broker by depositing from the bank and withdraw the trading profits back through the bank.
The main attraction for traders is that this firm is approved by DMCC to do their crypto trading, with the clarity that the profits will not be taxed, unlike in many other jurisdictions, the tax treatment is unclear.
For management of own funds the bank availability is even more worse then for institutional OTC desks, exchanges etc.
Yes - you need to hire a compliance officer but everything else is pretty forward - all the classic Exchanges are available to work with you.
However Management of own funds only a small number of private banks consider you and then again they don't want to see much more activity beside of HODL to charge you high fees like 1.9% brokerage fees.
This private banks by the way onboard you every company if they really want to work with you so every 1k$ BVI or RAK makes it even without a Crypto License because the bank makes the due diligence anyway on you as a private person as well as on your funds - you can even have a completely other business activity on it - a Supermarket can invest his profits in Crypto as well - sounds stupid but makes no difference at the end of the day for the bank that onboards you with Crypto.
If there would be really an advantage with the DMCC license you would need to have access to banks you won't get without a DMCC license and that's simply not the case.
I mean we are talking about 10.000-20.000$ for a company without having more upside then a 1k$ RAK on the banking side.
We don’t plan to use the bank for brokerage. The bank transaction will only be when funding the brokerage account, as the funds will be sitting at the brokerage most of the time, except when taking profits back.
You are right in saying that the crypto license is really moot as the firm is trading its own money without dealing with public money. Just like retail traders do not need a license to trade their own money. It’s only the tax treatment that is the advantage here.
In many countries short term trading is taxed. Like in the US at the marginal tax bracket, tax can be ~50% of the trading profits. In such a situation, on a large trading account (> $1M) spending $20K for license to get a tax free treatment is worth it, but only if a bank can be opened. If not, it‘ll be a useless piece of paper.
The fact that DMCC states that they can’t guarntee a bank account opening with the license and recommends using your own contacts instead is a cause for concern.
Would you recommend getting a RAK company instead and try opening a bank account there? The tax treatment will be the same. The crypto license is more for vanity than of real use then
I don't recommend anything beside of what we setting up but banking wise yes a RAK costs you 1k$ while a DMCC costs you 10-20k$ and in terms of banking both have the same outlook - close to no bank will consider you and the local UAE banks are out of play from the very beginning. That's pretty stupid because you have then immediately a non-resident banking case.
The DMCC Crypto License would be worth the money if it would grant access to local UAE Banks but it doesn't.
The DMCC Crypto License would be worth the money if it would grant access to local UAE Banks but it doesn't.
I've talked to a few local banks about opening a crypto business account and they all have the same reaction: 'forget it!'
So I reached out to the DMCC crypto centre with whom I have the crypto license. They recognized that there are hostilities from local banks and said that they built relationships with these offshore banks:
• SEBA Bank
• EQI Bank
• Swissquote Bank
• Maerki Baumann Bank
• Sygnum Bank
They said that the DMCC crypto centre can help put me in contact with any of these banks if I wanted to open an account.
Which of these banks can be a good option (ease, fees, safety) ? My objective is to be able to make transfers from a crypto exchange to a business bank account, then to transfer out to a personal bank account. Expected amounts are high 6 figures USD.
I'm still doing some research. It looks like EQI bank is the first to eliminate based on negative feedback from the community.
Some people are saying that I can withdraw 6 figures from kraken to a personal account at a local UAE bank as long as I can prove that the source of the funds is legitimate. Is that true? If yes, then the whole story of a crypto company is just a loss of time and money.
So I reached out to the DMCC crypto centre with whom I have the crypto license. They recognized that there are hostilities from local banks and said that they built relationships with these offshore banks:
• SEBA Bank
• EQI Bank
• Swissquote Bank
• Maerki Baumann Bank
• Sygnum Bank
They said that the DMCC crypto centre can help put me in contact with any of these banks if I wanted to open an account.
Which of these banks can be a good option (ease, fees, safety) ? My objective is to be able to make transfers from a crypto exchange to a business bank account, then to transfer out to a personal bank account. Expected amounts are high 6 figures USD.
I'm still doing some research. It looks like EQI bank is the first to eliminate based on negative feedback from the community.
Some people are saying that I can withdraw 6 figures from kraken to a personal account at a local UAE bank as long as I can prove that the source of the funds is legitimate. Is that true? If yes, then the whole story of a crypto company is just a loss of time and money.
It's true in a sense that you can't just approach them with your crypto licence and expect to open a bank account as soon as possible, you need 1 on the following things to be able to work around that:
1- Have a strong history and diversified portfolio with the bank, so your crypto business seems like another business endeavor and not your main focus.
2- Work with an influential local Emirati (in a form of partnership) and you can get it done
Forget EQI bank, for others, some of them are public companies, regulated and has 100k protection scheme in switzerland like swissquote and Maerki Baumann, so your money is safe to that extent at least.
I'm one of these people, and yes I transfer 6 figures from my account in kraken to my personal EUR account in the UAE regularly without any issues, but as i always and always say, I don't use my personal banks for crypto transfers only because that's asking for problems, I utilize everything the bank has to offer, credit cards, loans, mortgages ..etc, plus I don't make it an issue if the bank want to take some "fees" because that's how they make money, and in the end, I'm happy and the bank is happy and that's how you want to approach the local UAE banks if you're looking for a long-term relationships with them.
Yes going with a crypto company is just a loss of time and money and here is why:
- The mentioned banks are all Private Banks except Swissquote - this means they want you to use there services of Crypto Custody with min. 1m$ - the Brokerage with this banks is something between 0.5-1.9% as well as a Custody Fee from 0.5% to 1.25% and some have even % transfer fees for sending and receiving Crypto
-> they wouldn't earn anything from you if you just keep using Kraken and use them like a normal retail current account - so you use banks like Sygnum, SEBA and Maerki Baumann only if you want to replace Kraken or other Exchanges with a fully regulated Bank for your Crypto Trading and Custody and for this they charge you a good % - in everything else they are not interested
- Swissquote doesn't provide Crypto Services for Instituional which means you need to trade under a Personal Account Crypto with them - Institutional Account requires 1m$ in Assets with them as well
You have actually only Private Banks like aboth that onboards you with a Passive Holding Company if you use there in-house Pricey Crypto Service or Fiat On-/Off-Ramp banks that works with fully licensed Crypto Companies like Exchanges and OTC Desks with in-house Compliance Team - namely this banks are Bank Frick, Signature Bank, Silvergate Bank, Incore Bank, ClearJunction and some smaller Banks like Fidor.
I have seen no classic retail Bank faciliating what you are looking for with a Dubai Company - as they either don't focus on being used for Crypto Cashout or they are a Private Bank that force you to use there in-house service to charge you a good amount of money -> they will show you the door of course if you use them just for withdrawing from Kraken because they don't earn enough to keep you as a high risk client.
Plot Twist:
All the aboth mentioned banks onboard you even with a RAK ICC, BVI or Panama Company which you get for 1000$ because for this Private Banks the Personal Background and your Wealth is the only fin that matters.
The Crypto Company License would be only worth the money if it would get you access to the local UAE retail Banks -which they don't.
if you ask me - dealing daily with the local UAE Banks - they being Crypto Friendly will happen never - the compliance costs would be just to heavy for them having now already issues with there Indian/Pakistan low quality Compliance faciliating normal low risk Business Case.
Luckily we have a 0% Tax Environment with no Audit or Accounting requirement - if setup right - so you have literally 1000 ways around it - however a DMCC Crypto License in not one of them.
Thanks! That's very helpful.
I think I have to inform my self better. Do you suggest somewhere to start?
That's cool, in the first post you said "create a company in Dubai for crypto trading". Some people are looking at setting up and invest in crypto trading businesses to make profits, but I see now that's not what you meant.
I can always trade using personal exchange accounts. The reason I wanted to do it within a company is because I thought that access to banking would be easier in that case, but it seems to me now that the opposite is true.
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