The Berlin based bitcoin start-up, Bitwala, is to transform into an actual bank with the usual direct debit services, IBAN accounts and a MasterCard debit card, after entering into a partnership with an unnamed German bank.
“Bitwala accounts will be fully regulated by The Federal Financial Supervisory Authority of Germany (BaFin) (current application pending), meaning your funds up to €100,000 will be guaranteed, in our case by the deposit guarantee scheme of German banks,” the company said.
Once this launches in a few months, customers will be able to buy and sell bitcoin directly from the bank account, with the company planning to add other cryptos in the future.
“Our founding vision has always been to bridge the gap between traditional and crypto economies,” said Jörg von Minckwitz, Co-founder and CEO of Bitwala, before further adding:
“We believe that traditional banking was and has always been the weak link of the whole process, and we are looking forward to build an account that will tackle these very weaknesses.”
As an EU based bank, customers will be able to use SEPA transfers in and out of the account, which are usually instant.
Bitwala however does not hold the crypto private keys, they would not therefore be covered by deposit guarantees, but fiat funds up to €100,000 will be covered.
“Your Bitwala account will be immediately available on your Bitwala contactless debit card as well. Having the new card will also mean that you will have much lower fees and higher spending limits,” the company says.
Bitwala is one of a number of companies that have now started either outright buying banks, founding banks, or partnering with them, in a move to address anti-competitive practices where blockchain companies find their bank accounts closed for no other reason than that they are a crypto/blockchain start-up.
This development therefore is quite interesting, especially as Bitwala specializes in international remittances whereby they convert your bitcoin or crypto to fiat bank account deposits across 20 countries.
Becoming a full on bank would allow them to do so far easier, and perhaps cheaper, just as it might make Bitwala the go to place for a bank account if you run a blockchain start-up or even if you’re just a cryptonian.
So bringing much needed competition to the old legacy system and beginning a merger of sorts in a process where the old is slowly replaced with the new.