If You’re a Crypto Provider, You Need to Be Issuing Local Named End-User Virtual IBANs for Your Users

As a crypto provider, you are well aware of the borderless promise of cryptocurrency and its potential to decentralise and democratise financial systems globally. However, the reality often places you at the virtual border control, dealing with traditional banking constraints and regulatory frameworks that can restrict the fluidity of moving funds between fiat and crypto.

You’ve likely seen the benefits of pooled virtual IBANs in collecting from and sending funds to your users, yet you’re also familiar with their limitations. It’s time to consider the next step: local named end-user virtual IBANs. These are not just tools to enhance your users’ experience but are also pivotal in streamlining your compliance and operational processes.

Global standardisation meets localised needs

You know the value of the trust and reliability that comes with the internationally-recognised IBANs. Now, imagine offering your users named virtual IBANs that are localised to their region, providing them with seamless transactions reflective of their local banking experiences. This approach diminishes the inertia often associated with international transfers, ensuring adherence to global financial practices while catering to local preferences.

Your users will appreciate the familiarity and reassurance of local banking combined with the innovative capabilities when using named end-user virtual IBANs. For instance, a French user utilises a French virtual IBAN linked to their crypto account, thus avoiding the intricacies of perceived fees related to cross-border transactions and virtual IBAN discrimination.

Reconciliation that benefits everyone

There are a number of ways that improved reconciliation can benefit your business:

– Streamlined fund allocation and automated transactions
Named end-user virtual IBANs simplify fund allocation by assigning each user a unique named virtual IBAN, reducing errors in fund transfers. These transactions can then be tracked automatically, ensuring seamless payment identification; crucial for real-time processing in the fast-paced crypto market.

– Reduced reconciliation time
Minimising the need for manual cross-checking and error correction means named end-user virtual IBANs cut down on the time required for reconciliation, easing the workload on your payments team. This efficiency allows for instant reconciliation, ensuring that your accounts are always up-to-date—a critical aspect for both operational integrity and customer satisfaction.

– Facilitation of payment aggregation
As soon as the funds hit the named end-user virtual IBANs, the funds are sent to a master account while still maintaining their individual references. This allows for the consolidation of funds and a holistic view and availability of cash flows without losing the granularity of individual transactions. Funds can then be used by the crypto platform to make payments such as buying crypto from other liquidity providers if they need to, without having to build the mechanism of sweeping named end-user virtual IBANs funds towards the crypto platform’s master account.

– Enhanced user experience
For your users, the specificity of having their own localised virtual IBAN means that they have a better top-up and withdrawal experience, benefiting from a virtual IBAN in their own name that they can record as beneficiary on their primary bank app, without the need to worry about a reference number. The fact that it’s in their own name ensures less delays in sending and receiving the funds as the primary bank knows it’s the user sending money to themselves rather than a crypto trade being performed potentially involving a review by their compliance team. The fact the virtual IBAN is a local one is the cherry on top as it feels for them like a local experience and they don’t have to worry about any potential cross-border fees or for example any troubles in registering the virtual IBAN as a beneficiary (as it can be the case for foreign EUR virtual IBANs in some traditional banks).

A more transparent way to be compliant

Named end-user virtual IBANs serve as a keystone when it comes to compliance, particularly with Anti-Money Laundering (AML) requirements and regulatory mandates. They offer a distinct and traceable audit trail for every transaction; simplifying the complexity of financial tracking and reporting. This clarity is not just convenience; it’s a stringent measure that aligns with the demands of regulators, providing them with the assurance that funds can be traced from origin to destination without ambiguity. The ability to demonstrate such control over financial flows bolsters your commitment to operating within the bounds of compliance. The fact that they are localised is a plus when it comes to user experience as it looks and feels for them that you are providing a local service.

Integrate this with established clearing systems like SEPA or TARGET2, and you’ll find yourself in a stronger position to handle transactions efficiently, and keep pace with the rigour of international regulatory frameworks. Done correctly, you can offer the promise of instant cryptocurrency access—seamless and borderless financial transactions—while firmly adhering to the governance that underpins financial security and integrity in the digital age.

My advice is clear; adopt localised named end-user virtual IBANs and you’re not just keeping up, you’re setting the pace, establishing your firm as a leader in financial technology. This strategic move not only matches the offerings of traditional financial services but enhances the financial experience of your users within the crypto sphere. It signals a commitment to a connected, user-focused financial ecosystem and reinforces your role in driving the industry’s innovation, trust, and growth.

About The Author

	Sophie Guibaud is a co-founder at Fiat Republic. She is a banking-as-a-service veteran with 15-years experience in finance and high-growth startup roles including ex-CMO at HelloFresh, Head of Product Strategy at Bankable, MD Europe at Fidor, and CGO at OpenPayd.

Editorial Note: This Press Release is made possible by MVPR.