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Cryptocurrencies are being widely adopted by many people across the globe, creating a demand for crypto-related services.
Businesses have understood this trend and are moving towards launching their own crypto banks to provide seamless crypto wallet, crypto card, and crypto account services.
But launching a crypto bank from scratch is a very hectic process.
You will be required to obtain licenses for running a bank, which is a time-consuming process.
This is why you should opt for a fully licensed crypto banking service without building infrastructure from scratch,
This blog will help you understand what a crypto bank is and how you can launch a fully licensed crypto bank without building infrastructure.
What is a Crypto Bank?
A crypto bank is a regulated financial institution that offers banking and investment services exclusively for digital assets, such as cryptocurrencies.
These banks provide you with both cryptocurrency and traditional banking services, enabling you to manage both digital and fiat currencies on a single platform.
This approach offers a secure and user-friendly way for you to buy, sell, and transfer crypto, and also experience traditional banking services like loans, credit cards, and savings accounts.
Why Building a Crypto Bank from Scratch is a Complex Process?
Building a crypto bank from scratch might give you the freedom to design your setup according to your requirements. But obtaining a license and launching it publicly is a highly complex task.
Let me tell you 3 reasons why building and launching a cryptocurrency bank from scratch is a complex process.
Infrastructure Cost:
Setting up the core banking infrastructure, wallets, ledgers, and a card issuing system will require a significant amount of capital.
Compliance Complexity:
You will be required to obtain a crypto banking license in order to run a bank. Also, adherence to compliance, like KYC/AML, and audits can create operational challenges.
Operational Challenges:
Maintaining secure custody of the crypto assets and recording and managing all transactions accurately requires expertise.
Steps to Launch a Crypto Bank without Building Infrastructure
Launching a fully licensed cryptocurrency bank without building an infrastructure from scratch can be done in 6 simple steps.
Let me explain them in detail.
Step 1: Define Your Crypto Banking Model
First, you should identify your target audience. You may build a model for
- Individual users
- Corporates
- Hybrid (Both individual users and corporate)
Next, you should decide on the services you are going to provide. The common crypto banking services include,
- Wallets
- Cards
- Payments
- Crypto Trading
Step 2: Choosing a Crypto-Friendly Jurisdiction
Running a crypto bank in a crypto-friendly country is essential.
Also, you should select a crypto-friendly jurisdiction that provides you with clear regulations and other requirements.
Step 3: Partner with Crypto Bank Infrastructure Provider
You should select the best crypto bank infrastructure provider that helps you to run your business smoothly without facing any hurdles.
There are many companies that offer Banking-as-a-Service and crypto infrastructure. Choose these kinds of companies, as they eliminate the need to build a wallet, ledgers, custody, and payment systems from scratch.
They provide pre-built infrastructure for
- Crypto Wallet
- Payment Cards
- Core banking services
- Ledgers
Step 4: Integrate Compliance
Running a crypto bank smoothly will require the integration of compliance, such as KYC and AML.
This will help you to meet regulatory and security requirements to run a crypto banking service.
Step 5: Test Workflow and User Experience
You should concentrate on delivering a user-satisfying application that functions flawlessly. So, testing the application workflow and user interface is a must.
Carry out thorough testing and ask yourselves whether the app is
- Reliable and secure
- Delivering a seamless user experience
- Supporting smooth transaction processing
- Providing accurate balance updates
- Properly integrated with third-party APIs
Step 6: Launch Your Crypto Banking App
Launch your platform for public use and monitor continuously. This will help you to scale up your product in the future.
Concentrate on building a platform that handles high transaction volumes and modular expansion to accommodate future growth.
Core Components Required for a Crypto Banking Solution
As you are launching a crypto banking solution without building an infrastructure from scratch, you should concentrate on the core components provided by the BaaS companies.
Select a provider who offers a modular system that covers all critical operations.
Let me list out some of the core components that you should consider while opting for a BaaS product.
Core Banking Ledger
Opt for a secure and compliant core banking ledger that helps you to record transactions accurately.
Also, choose the one that handles core banking modules like account management, transaction processing, and balance calculations.
Wallet
Choose a wallet system that provides multi-currency support for crypto and fiat currencies. It should also be able to handle instant deposits, withdrawals, and transfers.
Select a wallet that handles real-time balance updates and maintains transaction records.
Card Issuing and Payment System
Ensure to integrate the card issuing and payment system into your crypto bank. Select a card issuing and payment module that offers instant crypto and fiat card payments.
Also, ensure to select a module with both virtual and physical card services.
Asset Custody and Transaction Management
It is essential to store and manage assets securely. Select a module that provides both cold and hot storage of assets.
KYC/AML Compliance
Integrating KYC/AML compliance in the crypto banking solution is a must. Select a module that provides automated identity verification and AML checks.
Payment Gateway
Integrate a payment gateway system that handles on-ramp and off-ramp, and one that smoothly integrates with card systems.
Mobile App
Customers prefer accessing their bank accounts from everywhere. To provide comfort for your users, have a mobile app for your crypto banking service.
This enables your customers to access wallets, view balances, and make payments quickly.
Why Start a Licensed Crypto Bank Without Building Infrastructure From Scratch?
For startups and businesses that want to start a licensed crypto bank can opt for a pre-built, modular infrastructure that is faster and more secure.
Here are 3 points why you need to start a licensed crypto bank without building infrastructure from scratch.
Faster Market Entry
Building a crypto bank from scratch will take an ample amount of time.
Whereas starting a fully licensed crypto bank using a pre-built solution without building an infrastructure will pave the way for faster entry to the market.
Lower Investment
Building a crypto bank will require a larger investment. But using a pre-built infrastructure will reduce your development and operational costs
Helps You to Focus on Product Innovation
Instead of concentrating on the back-end architecture of the crypto banking application, opting for a modular infrastructure will allow you to focus on features, user experience, and customer acquisition.
Conclusion
Launching a fully licensed crypto banking solution without building an infrastructure from scratch will help startups and businesses to enter the market faster.
This approach will eliminate the need to look into the complex operations. Instead, you can focus on user acquisition and planning marketing for your solution.
This modular approach will enable you to launch faster, maintain compliance, and scale efficiently.
Launch a fully licensed crypto bank without the operational burden of building it from scratch.
