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First Crypto Bank ‘Bitwala’ Launches STO – Why It Is Not a Good Investment Opportunity

Bitwala has recently launched its STO. The start-up is the first to offer a banking service that combines a checking account with cryptocurrency trading. To call the STO ambitious is an understatement as the banking company wants to raise a sum of up to tens of millions of Euro based on its token sale model. The presale already started and the minimum investment is €100,000. A public sale will follow in the second quarter of this year and the minimum investment will be €500. Bitwala expects that the public STO will last for about 30 days. So will Bitwala be a good investment opportunity as the worlds first bank account service that offers easy access to crypto?

Bitwala – Just a Front-End as of now

Throughout the ICO craze of 2018, we have seen a lot of companies that had nothing to offer but a whitepaper full of promises. Empty promises or even scams as it turned out. And while Bitwala can legitimately say that they can offer a “[f]ully German compliant” STO they do not have their own banking license yet. The banking platform can offer its bank account only through its partner, SolarisBank. The SolarisBank describes itself as a tech company with a banking license. Bitwala currently seems to offer nothing but the front-end which is the website. The real service, the know-how, hardware and software behind the banking platform comes, supposedly, from SolarisBank only.

No Key Performance Indicator – Not Even User Numbers

Investing without KPI is like traveling without any means of navigation

Bitwala just launched its service in December. This means there are, of course, no key performance indicators. No numbers on users, earned money, revenue or growth expectations. The only number that Bitwala can give is the number of registered users of 40,000+. How many of these registered users really have applied or will apply for a checking account is unclear. A state of affairs that reminds a lot of the ICO craze that started almost two years ago now. Bitwala does not launch to hand a company with a useful product over to the public, but to built it in the first place. Meaning as of now there is little utility, i.e. little value. But maybe the business model is strikingly convincing?

Bitwala’s Business Model

Currently, there is only a one-pager available that understandably does not really go into detail. But what the one-pager reveals about the new banking service is not really convincing. The checking account itself comes at no cost which is not surprising as many non-crypto banks have similar offers under certain conditions.

The bank will have two income sources: trading fees and what is summed up as “cross selling”. The latter category encompasses “Brokerages, fixed deposits, savings plan, wealth mgmt. & lending.” Given, the speculative and volatile nature of cryptocurrencies it is unlikely that a young startup as Bitwala will find many trusting clients. And as crypto enthusiasts, of course, aim to become financially independent (their own bank), it is a bit unclear whom Bitwala addresses with its services.

The trading fee model of Bitwala is also too expensive for experienced crypto investors and traders. A trading fee of 1% is five to ten times higher than the trading fees that established exchanges demand for their service. Only traders that exceed a monthly volume of €15,000 can negotiate lower fees. It is doubtful that professional traders want to trade cryptocurrencies with a volume of >€15.000 and that they will create a checking account just for the sake of it. Therefore, the only target group of Bitwala seems to be beginners in cryptocurrency investment. Anyone else has few problems with using more competitive exchanges.


Is Bitwala in conclusion a good investment opportunity? A clear no. Unfortunately, the first crypto bank of the world just looks like an average crypto project in 2017/18. Possible that the German bureaucracy is responsible for Bitwala to arrive this late to the party. But maybe the title of being the “first crypto bank” of the world can create a hype similar to BitTorrent’s ICO to jerk yet again millions out of the market. Maybe they will build something useful after having collected millions of Euros. However, the time to blindly trust any crypto project and deal out premature praise is over but DYOR.

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