German blockchain-based payment service provider Bitwala announced on February 26, 2018 that it is launching a new online banking service that combines traditional banking features with the crypto economy. The service will come with real Mastercard debit cards and is pending regulatory approval from the German Federal Financial Supervisory Authority (Bafin). If approved, customer deposits will be protected up to €100,000 under the German deposit guarantee scheme.
Bitwala’s New Banking Service
Bitwala stated that the new accounts will “enable a seamless transition between the crypto and fiat worlds” and will include a German IBAN, BIC, and a physical debit card from Mastercard. The company currently boasts over 57,000 users across more than 200 countries and has opened pre-registration for the new service. Bitwala emphasized that the accounts will be fully regulated by Bafin, with the application still pending. Once approved, the deposit guarantee scheme of German banks will guarantee funds up to €100,000 (~$123,000). Customers will be able to buy and sell cryptocurrencies, manage daily expenses, and set up direct debits directly from their accounts.
Account Features and Debit Card
The new Bitwala accounts come with a contactless debit card linked to the user’s balance. “We will be issuing a contactless debit card, enabling you to spend your funds instantly in shops, online and at any ATM,” the company explained. The debit card will have much lower fees and higher spending limits compared to the prepaid cards previously offered. Bitwala claims that balances will be immediately available on the card, and the account aims to be the perfect solution for those seeking secure and crypto-friendly banking.
Background: Prepaid Card Suspension
Bitwala had earlier offered prepaid Visa cards issued by Wavecrest Holdings Limited. However, on January 5, 2018, Visa Europe directed Wavecrest to immediately suspend all Bitwala cards, citing violations of Visa’s operating regulations. Visa terminated Wavecrest from its network, forcing the closure of all crypto-linked Visa card products issued by Wavecrest. This affected not only Bitwala but also other crypto companies like Cryptopay, Wirex, and Tenx. As a result, Bitwala pivoted to Mastercard and sought direct banking licensing to avoid reliance on third-party card issuers.
Bitwala’s new banking service represents a significant step toward integrating cryptocurrency with regulated financial services. If Bafin grants approval, Bitwala will become one of the few platforms offering both a regulated bank account and cryptocurrency trading under one roof.
Note: This article is based on original reporting published on February 27, 2018. Some details may have changed since then.