How Crypto-Friendly Banks Make Money: 6 Revenue Streams

Crypto banking works within a different revenue logic than traditional banks. Most crypto-friendly banks cannot lend out money, cannot pay interest on deposits, or earn income on their balance sheet sitting overnight. Hence, they must derive their revenue through a series of transactions, fees, and spreads. The mix of offerings and the license they hold determine how crypto-friendly banks make money.

Main revenue streams of crypto-friendly banks

Crypto-friendly banks have a series of revenue streams stemming from the products and transactions they facilitate. Because most of these banks do not lend out money or pay interest on deposits, they rely on other streams of income to supplement their revenue.

1. Transaction and payment processing fees

One of the main streams of income for crypto-friendly banks is the fees they receive from the transactions that customers make through their banks. These banks charge a fee for every fiat transaction that goes into or out of their accounts. They work with payment rails such as SEPA, SWIFT, and various faster payments protocols, each with its own fees. They pass these costs on to their customers with a margin for operating costs. For banks serving the business market with crypto businesses and exchanges, this is often their primary revenue stream.

2. Crypto-fiat conversion margins

Another revenue stream is the fees they take on crypto-fiat conversions. They may take a percentage of the spread in the exchange rate or a fixed conversion fee at execution. The economics of this stream depend largely on volume from crypto businesses and exchanges rather than retail flow. Corporate clients running OTC desks, payment processors, and exchange operators generate the turnover that makes the spread model viable. Retail conversion flow exists, but it does not produce the volume needed to carry the cost base of a regulated bank.

3. Card issuing and interchange

Crypto-friendly banks issue cards tied to customer accounts. Each time a customer spends from these cards, the bank earns interchange fees. In addition to interchange, they may earn card top-up charges, FX margins at the point of sale for foreign currency transactions, and ATM withdrawal fees.

4. Account fees and tiered pricing

Monthly account fees and tiered pricing convert the customer base into recurring revenue. Higher-tier accounts grant higher transaction limits, dedicated support, or lower per-transaction rates, with tiering usually calibrated to corporate crypto clients who can absorb the cost. In addition to monthly fees, many of these banks charge enhanced due diligence fees at onboarding for higher-risk clients. These fees reflect the cost of KYC, source-of-funds checks, and ongoing transaction monitoring on businesses with crypto exposure, and they protect margins on accounts that would otherwise be unprofitable.

5. FX and multi-currency spreads

Multi-currency accounts generate revenue through FX spreads on conversions between fiat currencies. A client holding balances in EUR, USD, and GBP and moving between them inside the bank pays a spread on each conversion, and that spread is wider than the bank's own cost of liquidity. The margin compounds with high-volume corporate clients who treat the bank as treasury infrastructure, converting between fiat pairs as part of their normal payment operations rather than using a separate FX provider.

6. Custody and yield products

Custody and yield products sit at the higher end of the revenue stack and depend on the right licensing. Under MiCA or equivalent permissions, a crypto-friendly bank can hold client crypto assets and charge custody fees calculated as a percentage of assets under custody. In addition, banks with the right authorisations can offer staking and yield products, taking a revenue share on the staking rewards or the yield generated for clients. These lines are smaller than payments and conversion in absolute terms for most of these banks today, but they carry higher margins and compound with assets under custody over time.

How does this compare to traditional bank revenue

The economics of a crypto-friendly bank are different from those of a traditional bank in two ways: where their revenue originates and how much of the balance sheet actually earns revenue for the bank. There are two main differences in the bank business model that exist as a result of the license to operate, rather than as a result of the banking institution's choices in commercial operations. Each of these differences is discussed below.

Net interest income vs fee income

The first major difference between a traditional bank and a crypto-friendly bank is the actual source of their revenue. Traditional banks derive the majority of their revenue through net interest margin, the difference between the low interest paid to bank depositors and the interest earned from lending that money to other individuals and businesses. The non-interest revenue of banks is considered secondary to this main source of revenue. A crypto-friendly bank that operates under an EMI license, however, does not have access to interest-based revenue models. As a result, the bank must rely on fees and revenue from the difference in spreads between the cryptocurrencies it trades and its revenue from customer transactions alone.

Where the EMI license caps the model

The most common license for crypto-friendly banks is the EMI license. Within this license, a bank is prohibited from paying interest on deposits that are made to the bank and from issuing loans to those customers of the bank. Any funds that are held by the bank in customers' accounts must be held in segregated accounts within other banks with which it partners to safeguard those funds. Thus, those funds within the customers' balances earn no revenue for the bank; it must derive all of its revenues from transactions with those customers.

How specialised banking and MiCA expand it

A license that is second in popularity for crypto-friendly banks is that of a specialised banking license, which is offered to banks in jurisdictions like Lithuania and Latvia. Banks that receive this license are permitted to lend money and earn interest income with balances that are significantly lower than those required to receive a full banking license. Furthermore, licenses that are offered under the MiCA framework allow crypto-friendly banks to earn income from providing custodial, exchange, and advisory services for cryptocurrencies. Thus, a bank that holds both a banking license and a MiCA license is able to earn interest income, fee income, conversion revenue, and custody fees, the components of a full-service crypto-bank.

Where DECTA fits in a crypto-friendly bank's stack

DECTA's Digital Banking Platform provides the client-facing web and mobile interface along with the modules behind it: core banking, payment switching, FX, AML and KYC, and connections to card schemes and alternative payment methods. The platform was originally built for businesses inside DECTA's own group, several of which operated in crypto-related services.

DECTA also runs certified issuer and acquirer processing for Mastercard, Visa, and UnionPay across the EEA and APAC, and offers a White Label Payment Gateway for online payment acceptance. A crypto-friendly bank built on DECTA infrastructure runs its banking, card, FX, and payment processing on a single integrated stack.

What determines profitability across the mix

The type of customers a bank serves determines how crypto-friendly banks make money. A bank that focuses on business clients and cryptocurrency-related businesses will experience higher transaction volumes, higher turnover of cryptocurrencies that are exchanged, higher fees from those customers, and a more concentrated risk of those customers defaulting on their loans and deposits. Furthermore, established crypto banks that operate with EMI licenses have reported processing volumes of close to €1 billion in monthly fiat currency transactions from these businesses.

In contrast, a bank that focuses on retail customers and retail users of cryptocurrencies will experience lower profits per customer, higher compliance costs, but profits that increase with growth in the number of customers of the bank.

The fee-only revenue structure for crypto-friendly banks must include the costs of anti-money laundering (AML) and know your customer (KYC) regulations that most traditional banks do not have to absorb. A bank will only be profitable if the revenue structure is dense enough to include the cost of these regulatory programs and systems. Thus, banks whose revenue is limited to only conversion fees, only cards, and only payment processing will struggle to be profitable; those that offer a variety of revenue streams will clear their cost base and be able to make a profit.