Many people now use banks for cryptocurrency transactions but can face having their accounts shut down which can be a frustrating and stressful experience, disrupting ability to trade, transfer and manage crypto holdings.
In this article, we’ll analyse some effective strategies to avoid having your crypto bank account closed. While there is no guaranteed way to prevent this from happening, following these tips can significantly reduce the risk of encountering problems with your bank.
Why do banks shut down crypto-linked accounts?
- Regulatory Concerns – cryptocurrencies are often considered high-risk, mainly because they are not tied to traditional banking systems. So if a regulatory body expresses concerns about possible illegal activities like money laundering or fraud, the account could be blocked.
- Suspicious Transactions – every time a bank notices large or frequent transactions to or from a crypto exchange or wallet, they may flag this account and review it. In general, this is done to prevent potential illegal activities or fraud.
- Policy Against Crypto – some banks simply have policies that forbid customers from linking their accounts to cryptocurrency exchanges. And in such cases, they can close your account if they detect any connection to cryptocurrency-related activity.
With that in mind, let’s consider some key strategies you can use to protect your crypto-linked bank account.
1. Choose a bank that supports crypto transactions
Not all banks are on board with crypto activities. As mentioned, some financial institutions do not support crypto exchanges or wallets, while others are more crypto-friendly. If your bank does not accept crypto transactions, they might identify your account or shut it down altogether if they see any related activity.
To avoid this risk, choose a bank that is open to supporting cryptocurrency transactions. You will find different options, because many digital banks and fintech platforms are pro crypto-accounts, as they understand the growing demand for crypto services. These banks often offer features that make it easier for customers to connect their bank accounts to crypto wallets or exchanges.
Some of the banks, known for being crypto-open, such as Revolut and Gemini, are specifically designed to integrate crypto activities with traditional banking. They allow users to buy, sell, and hold cryptocurrencies while offering the same basic services that regular banks provide, such as deposits and withdrawals. By using a crypto-friendly bank, you can greatly reduce the chances of your account being flagged or shut down due to crypto-related activity.
Traditional banks and crypto
In turn, traditional banks may not be as sensitive to cryptocurrency activity. Some might not allow direct deposits or withdrawals from crypto exchanges, and others might block your account if they notice any suspicious activity. Consequently, be sure to do extensive research before linking your bank account to an exchange or crypto wallet.
In this context, we can mention the example of Danske Bank, in Denmark, which in 2018, introduced a ban on cryptocurrency- linked transactions
This policy was implemented in response to uncertainty of regulation and officially banned customers from using their accounts to buy, sell or exchange cryptocurrencies. It also completely stopped processing payments to and from cryptocurrency exchanges.
This type of policy is not unique to Danske Bank, and other banks in the EU and around the world have adopted similar positions.
2. Be Transparent with your transactions
When using a bank account for crypto-related activities, transparency is absolutely necessary. A bank may become suspicious if it notices large or irregular transactions, especially those without proper explanations. Take into consideration that if your bank can’t decipher what the purpose of a transaction is, it could consider it as doubtful. This could lead to a review of the account, which in turn could lead to the account being suspended or closed.
In order to reduce the chances of this happening, always make sure your transactions are clearly labelled. This means avoiding generic or vague descriptions such as “payment” or “transfer”. Instead, provide specific, easy-to-understand descriptions, such as “withdrawal from a crypto exchange” or “investment deposit”.
When you decide to transfer funds from your crypto wallet to your bank account, give a clear description like “Crypto exchange withdrawal” or “Investment from Bitcoin earnings.” This gives the bank more context, which helps avoid any confusion or suspicion.
Additionally, it is extremely helpful to maintain a consistent pattern of your transactions. If you suddenly make large or frequent transactions without explanation, the bank may begin to question your activities. Maintaining consistency will help the bank understand that your account is being used for legitimate purposes, reducing the chances of a closure.
3. Avoid frequent withdrawals without explanation
One of the most common triggers for a bank to close a crypto-related account is the occurrence of large or frequent withdrawals. If the bank notices sudden changes in the amount or frequency of your withdrawals, especially if these withdrawals are related to a crypto exchange or wallet, this could be considered a red flag. As a consequence, this could push bank representatives to investigate your account and, if they consider the transactions suspicious, block or close your account.
If you plan to withdraw a significant amount of funds from your crypto account, consider breaking it into smaller withdrawals over several days or weeks. This helps maintain a consistent transaction pattern, which is less likely to raise suspicion. Additionally, you could contact your bank beforehand and let them know about the upcoming withdrawal, explaining that it is related to your crypto investments. By doing so, your bank will be less likely to freeze or shut down your account.
Finally, be aware of the withdrawal limits set by your bank. Some banks impose limits on how much you can withdraw within a specific period. If you try to exceed these limits, your bank might flag your account or take other precautionary measures. Always be mindful of these limits to avoid triggering a shutdown.
4. Use secure and reputable crypto exchanges
Another important step in protecting your bank account is to only use trusted and well-known cryptocurrency exchanges. Low-quality or less-established exchanges may raise red flags with your bank due to their perceived risk of fraud or other illegal activities. High-risk exchanges may also have weak security measures, which could expose your funds and potentially make your bank suspicious of your account.
Stick with major, regulated exchanges like Coinbase, Binance, or Kraken, as these platforms follow strict regulatory guidelines and have a solid reputation in the crypto space. Using reputable exchanges reduces the likelihood of encountering issues with your bank, as these platforms typically adhere to compliance standards set by financial authorities.
5. Monitor your bank account regularly
Lastly, it’s a good idea to keep a close eye on your bank account. Regular monitoring will help you detect any unusual activity, such as transactions you didn’t initiate or unexpected fees. If you notice something unusual, reach out to your bank immediately to resolve the issue before it escalates. The quicker you address any problems, the better your chances of preventing a shutdown.
If you notice a large withdrawal that you didn’t authorize, contact your bank right away to report it. If the withdrawal is connected to your crypto activity, explain the situation to the bank and clarify the nature of the transaction. This shows the bank that you are actively managing your account and can help prevent any further bank action.
Bottom line
In summary, while there is no foolproof approach that guarantees that your cryptocurrency-related bank account will not be closed, you can significantly reduce the risk by choosing the right bank, being transparent in your transactions, avoiding high or frequent withdrawals, using reputable exchanges and monitoring your account on a regular basis.
By following these steps, you can continue your crypto activity with peace of mind and by following the rules, knowing that you’ve taken proactive steps to protect your account from closure.
Read our article “Opening a Crypto-Friendly Business Bank Account in 2025″ for more useful insights.
Looking for your own strategy to protect your crypto account? If you need personalised advice, our team of experts is here to help. Get in touch with our experts and book a free consultation today. We know how to help you.
Disclaimer
Widelia and its affiliates do not provide tax, investment, legal or accounting advice. Material on this page has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, investment, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. Please consult https://widelia.com/disclaimer/ for more information.
