An Exchange Has Two Banking Problems, Not One
An exchange that holds client fiat must distinguish client-fund arrangements from its own operating banking. These may use the same or different institutions, depending on the applicable rules and the institution’s offering. Confusing them is a common structural mistake in exchange launches.
MiCA Article 70(3) requires a crypto-asset service provider holding client funds other than e-money tokens to place them with a central bank or a credit institution by the end of the business day following receipt, in an account separately identifiable from any account holding the firm’s own funds.[1] The practical effect is that an exchange cannot satisfy the requirement with an EMI relationship alone, however good that relationship is, because an EMI safeguards rather than takes deposits. The exception is an exchange that is itself a credit institution, EMI, or payment institution: Article 70(5) disapplies the placement rule, and the client-fund rules of its own sector apply instead.[1] This can produce a circularity: the regulator will not authorise without a credible safeguarding arrangement,[6] and a credit institution may decline to open the account before the applicant is authorised. One response is a conditional or parallel process: an institution willing to do so issues an in-principle confirmation, which the applicant can submit with the application, and may activate the account once authorisation is granted, on its own conditions. Whether the confirmation suffices is for the regulator to decide.
The Working Stack Is Four to Six Relationships, Not One Bank
The layers serve different purposes and may use the same or different institutions, subject to the applicable rules and each institution’s offering.
| Layer | Institution type | What it carries | Placement difficulty |
|---|---|---|---|
| Client-fiat safeguarding | Credit institution (MiCA Art 70) | User balances, segregated, and identified | Hardest; gates the licence |
| Corporate operating | Bank or EMI | Payroll, suppliers, fees, treasury | Routine once licensed |
| SEPA and SEPA Instant | EU EMI or bank | User deposits and withdrawals in EUR | Moderate; volume-sensitive |
| Correspondent USD | Correspondent bank | USD clearing for non-EU flows | Scarce; the real bottleneck at scale |
| Card acquiring | Acquirer under MCC 6051 or 6012 | Card-funded purchases (quasi-cash) | Narrow panel, high reserves |
| Stablecoin settlement | Authorised EMT issuer or PI | Institutional and B2B settlement | Depends on issuer authorisation status |
Correspondent USD access is the constraint that binds at scale and the one most often discovered late. Active correspondent banking relationships declined by roughly 30% globally between 2011 and 2022, with USD correspondent relationships falling faster than the all-currency average in most regions.[2] An exchange whose growth plan assumes USD pairs should confirm the clearing route before the trading engine, not after.
The card layer is a narrower constraint of the same kind. Card-funded crypto purchases at an exchange code to MCC 6051 under Visa’s merchant data standards (6012 where the seller is a financial institution), which treat them as quasi-cash rather than ordinary e-commerce and list card-absent crypto exchanges under those codes as high integrity risk.[5] That coding, more than the exchange’s own risk profile, is what narrows the acquiring panel and sets the reserve terms in the cost table below.
Analytics, Travel Rule, and Wallet Architecture Decide the File
Exchange onboarding is among the most documentation-heavy placements in this sector, because the institution is underwriting a business whose counterparties it cannot see. Three areas carry disproportionate weight.
On-chain analytics. In practice, institutions expect a live, configured contract with an institutional-grade blockchain analytics provider before they onboard an exchange, and stated intent rarely satisfies them. No rule makes that contract a formal precondition, but the guidance points the same way: the EBA money-laundering risk-factor guidelines, as amended from 30 December 2024, expect crypto-asset service providers to have transaction monitoring and advanced analytics tools in place, scaled to their activity, and the New York Department of Financial Services advised New York banking organisations in September 2025 to consider blockchain analytics when serving crypto-exposed customers.[3]
Travel Rule implementation. The EU applies a zero de minimis threshold for transfers between crypto-asset service providers, so every transfer carries originator and beneficiary information regardless of value.[4] Institutions ask which protocol the exchange uses, how it handles counterparties that do not support it, and what happens to transfers involving self-hosted wallets.
Wallet architecture. Segmentation across hot, warm, and cold storage, multi-signature arrangements, and documented key management. This reads to a bank as operational risk rather than compliance: the question behind it is whether a single compromise can drain user balances the bank is safeguarding.
Beyond those, the file carries the standard licensing pack plus proof-of-reserves methodology where the exchange publishes one, market-surveillance arrangements, and a listing policy that shows how assets are screened before they are traded.
Jurisdiction Is a Banking Decision Too
Where an exchange incorporates and where it licenses are decided for regulatory reasons. Where it banks is a different question, and it should be answered on its own terms rather than assumed to follow the licence. A Lithuanian or Estonian operating EMI paired with a credit-institution safeguarding account in another member state and a correspondent relationship elsewhere is a normal architecture, not a workaround.
Within the EU the binding variable is which credit institutions in the licensing jurisdiction will take safeguarding business at all. Markets with a deep EMI layer are not automatically markets with willing safeguarding banks, and the two are frequently confused because both are described as “good for fintech”. Jurisdiction-level banking detail sits on the banking overview, and licensing pathways on the crypto licensing pages.
Outside the EU the pattern differs: Switzerland has dedicated digital-asset banks, the UAE has national banks running dedicated onboarding desks for licensed virtual-asset firms, alongside the VARA, ADGM FSRA, and DFSA licensing frameworks for the operators themselves, and Singapore has banks serving licensed digital payment token service providers. Each of those is a smaller set of institutions than it appears, and each applies its own minimum relationship size.
Costs and Timelines Are Set by the Two Slowest Items
| Component | Typical range | Timeline |
|---|---|---|
| Client-fiat safeguarding account | Relationship minimums from €25,000 to €500,000+ | 8–16 weeks, longer with conditional authorisation |
| Corporate operating account | €100–€500 monthly | 2–6 weeks (EMI) |
| SEPA and SEPA Instant rails | Per-item, low | 2–6 weeks |
| Correspondent USD | Negotiated; volume-gated | 3–9 months |
| Card acquiring (MCC 6051 or 6012) | 3.5–8% charged to the exchange, reserve 5–10% for 180 days | 4–12 weeks |
Ranges are indicative across the partner network as of . The two slowest items, safeguarding and correspondent USD, are also the two that cannot be started late, so both should run in parallel with the licence application rather than after it.
Through the placement model the pricing the exchange sees is the institutional rate. Jagelski & Partners is paid by the institution, not by the client, and does not mark up banking pricing.
How Jagelski & Partners Helps
Exchange placement is sequenced around the safeguarding account, because it gates the licence and, with correspondent USD, is one of the two slowest items. The assessment establishes which credit institutions will engage on a conditional basis in the target jurisdiction; the independent specialist introduced then builds the operating, rail, correspondent, and acquiring layers around that anchor so the slow items are already running when the regulator asks about them. It also covers the parts of the file institutions actually weigh: analytics provider and configuration, Travel Rule implementation including the self-hosted-wallet case, wallet architecture and key management, listing and surveillance policy, and the merchant category code position if card funding is planned.
What we do not do. We do not scope or introduce unlicensed exchange operations in jurisdictions where authorisation is required. That is screened at discovery, before the placement process begins.
Frequently Asked Questions
Because client money and company money are different in law. The corporate account holds the exchange’s own funds for payroll, suppliers and treasury. The client-fiat safeguarding account holds user balances. Unless the exchange is itself a credit institution, EMI, or payment institution, MiCA Article 70 requires those funds, other than e-money tokens, to sit with a central bank or credit institution by the end of the business day following receipt, identified separately from the firm’s own assets.
The safeguarding account is the harder placement and the one that gates the licence, so it should be started first rather than last.
Generally no. An EMI safeguards funds rather than taking deposits, and MiCA Article 70 requires client funds at a central bank or credit institution. However good an EMI relationship is, it does not satisfy the safeguarding requirement on its own. The exception is an exchange that is itself authorised as an EMI, payment institution, or credit institution: Article 70(5) disapplies the placement rule, and its own sector’s client-fund rules apply instead.
EMIs remain the right answer for operating accounts, SEPA rails and multi-currency treasury, which is why most exchanges run both rather than choosing between them.
With a conditional or parallel process. Where a credit institution is willing to issue an in-principle confirmation of the safeguarding arrangement, the applicant can submit it in support of the client-fund segregation procedure the application must describe; whether it suffices, and when the account can be activated, depend on the regulator and the institution.
Correspondent USD clearing. Active correspondent banking relationships fell roughly 30% globally between 2011 and 2022, with USD correspondent relationships declining faster than the all-currency count in most regions, so the route is scarce and volume-gated.
An exchange whose growth plan assumes USD pairs should confirm the clearing route before building the trading engine. Onboarding runs three to nine months, which is longer than most launch plans allow for.
Beyond the standard licensing pack, three areas carry disproportionate weight: a live, configured contract with an institutional-grade blockchain analytics provider; documented Travel Rule implementation, including how the exchange handles counterparties that do not support the protocol and transfers involving self-hosted wallets; and wallet architecture covering hot, warm and cold segmentation with multi-signature and key management.
Institutions generally do not accept stated intent on analytics; they ask for the contract and the configuration.
No. The EU applies a zero de minimis threshold for transfers between crypto-asset service providers, so every transfer carries originator and beneficiary information regardless of value. Transfers involving self-hosted wallets are treated separately and attract their own verification obligations.
Institutions test this specifically, because a gap in it is a gap in their own supervisory position rather than only the exchange’s.
Not necessarily, and frequently not. Licensing and banking jurisdiction are separate decisions. A common architecture pairs an operating EMI in one member state with a credit-institution safeguarding account in another and a correspondent relationship elsewhere.
The variable that matters is which credit institutions in the licensing jurisdiction will take safeguarding business at all. A deep EMI market is not the same thing as a willing safeguarding market, and the two are often confused because both get described as good for fintech.
Under Visa rules, card-funded crypto purchases use quasi-cash coding: MCC 6051 for non-financial institutions or MCC 6012 for financial institutions. That coding carries a narrow acquiring panel. Rates charged to the exchange run 3.5–8% with rolling reserves of 5–10% held 180 days, and issuer authorisation rates are lower than for standard e-commerce because many issuers restrict quasi-cash. An exchange routing card funding through an at-scale on-ramp provider instead pays that provider’s pricing, which is where the lower published end-customer rates come from.
Ranges are indicative across the partner network as of June 2026 and move with processing history and market mix.
Plan on the two slowest items rather than the average. Safeguarding runs 8 to 16 weeks and longer under conditional authorisation; correspondent USD runs three to nine months. Operating accounts and SEPA rails are 2 to 6 weeks, and card acquiring 4 to 12 weeks. Both slow items should run in parallel with the licence application, not after it, which is the single biggest scheduling decision in an exchange launch.
No. Jagelski & Partners is paid by the institution that takes the business, through a referral or revenue-share arrangement, not by a fee billed to the client. The pricing the exchange sees is the institutional rate, with no markup and no onboarding fee.
Ready to Place Safeguarding Before It Blocks the Licence?
Book an assessment. We establish which credit institutions will engage on a conditional basis in the target jurisdiction, then introduce an independent specialist to place the operating, SEPA, correspondent, and acquiring layers around that anchor so the slow items are already running when the regulator asks. No markup on institutional pricing. No onboarding fee.
References
Show all references
- European Union, Regulation (EU) 2023/1114 on Markets in Crypto-Assets (MiCA), Article 70 (safekeeping of clients’ crypto-assets and funds): Article 70(3), clients’ funds other than e-money tokens placed with a credit institution or central bank by the end of the following business day, in an account separately identifiable from the provider’s own; Article 70(5), paragraphs 2 and 3 do not apply to providers that are electronic money institutions, payment institutions, or credit institutions; Title V applicable from , eur-lex.europa.eu, accessed .
- Bank for International Settlements, Committee on Payments and Market Infrastructures, CPMI correspondent banking chartpack (end-2022 data, May 2023, the latest year of the CPMI’s annual series), Graph 1 and Tables 2–3: active correspondents fell from about 127,800 in 2011 to about 91,700 in 2022 (annual averages of the underlying data), and active USD correspondents fell faster than the all-currency count in six of seven regions, bis.org, accessed .
- New York State Department of Financial Services, Industry Letter: Notice on Use of Blockchain Analytics for New York Banking Organizations (), dfs.ny.gov (archived); European Banking Authority, Guidelines EBA/GL/2024/01 amending EBA/GL/2021/02 on customer due diligence and ML/TF risk factors, including for crypto-asset service providers (applicable from ), Guidelines 4.74(d), 21.11, and 21.13 (monitoring and advanced analytics tools), eba.europa.eu, both accessed .
- European Union, Regulation (EU) 2023/1113 on information accompanying transfers of funds and certain crypto-assets (the Transfer of Funds Regulation), applying the same information requirements to transfers of crypto-assets regardless of amount (recital 30, Article 14), with ownership checks on transfers above EUR 1,000 to or from self-hosted addresses (Articles 14(5) and 16(2)), eur-lex.europa.eu, accessed .
- Visa Inc., Visa Merchant Data Standards Manual (April 2026 edition), Section 2: cryptocurrency purchases use MCC 6051 (non-financial institutions) or 6012 (financial institutions) with the quasi-cash indicator, and card-absent crypto exchanges, wallet providers, and on-ramp providers under those codes are listed as high integrity risk, usa.visa.com, accessed .
- European Union, Regulation (EU) 2023/1114 (MiCA), Article 62(2)(k) (application must describe the procedure for segregating clients’ crypto-assets and funds) and Article 63(10)(d) (refusal where the applicant fails or is likely to fail the Title V requirements), consolidated text, and Commission Delegated Regulation (EU) 2025/305, Article 10(1)(d)–(e) (deposit procedure for clients’ funds and credit-institution selection factors), eur-lex.europa.eu, accessed .