Your fintech hates your crypto? Why using Revolut or PayPal might backfire

Millions of users buy crypto through money apps because they’re fast, simple, and familiar. Buying Bitcoin feels as easy as sending money to a friend. No complex exchanges, no separate KYC, no confusing wallets.

But behind this slick convenience hides a dangerous trade-off: you don’t truly own your crypto - and you could lose access to it at any moment.

Let’s break down why relying on fintech apps for crypto might hurt you - and how to stay safe if you do.

The appeal: why people use fintech apps for crypto

At first glance money apps make crypto look effortless. If you already have an account with them, you can buy Bitcoin the same way you top up your balance - no need to open a separate exchange account, no extra KYC, no learning curve. Everything sits in one familiar interface, right next to your fiat balance.

That’s the real hook: a frictionless on-ramp. These apps sell themselves as “crypto-friendly” for the mainstream, with instant purchases, in-app price charts and sometimes even the option to spend your crypto with the same card you use every day. To someone who’s never used Binance or Kraken, this feels safer than diving into a “real” exchange.

There’s also a trust effect. Big, known brands make people think: “If PayPal/Revolut offers crypto, it must be legit.” So users treat it like crypto with training wheels - you get the upside of holding Bitcoin or ETH, but under the umbrella of a regulated-looking fintech.

And in some regions, there’s a very practical reason: banks still block or question transfers to crypto exchanges. In those cases, using an intermediary like money apps looks like a clever workaround - you move money inside a fintech (which banks “understand”) and from there you get exposure to crypto without triggering alarms.

The problem, is that this convenience comes with a hidden cost: You’re playing crypto inside someone else’s walled garden.

The hidden problem: convenience at the cost of control

When you hand over control of your assets to these intermediaries, you also surrender the very principle that makes crypto different from traditional finance. The golden rule still applies: not your keys, not your coins.

When you “buy” crypto on these apps, you don’t actually own the underlying asset. The company holds the private keys; you hold a digital balance on their app. For years, some money apps didn’t even allow withdrawals to external wallets. Users could only buy or sell within the platform - meaning their Bitcoin was never really theirs to move.

As one review summed it up:

“If you can’t transfer your crypto, you don’t truly own it - you’re just trusting someone else to keep it for you.”

Some providers have since introduced limited withdrawals, but the setup remains custodial. The company still controls the wallets, and users still rely on its permission to access their funds. That’s where the risk hides. If a provider you are working with decides to freeze your account (or if a regulator forces them to halt crypto operations) your assets are instantly out of reach. The convenience that once felt liberating quickly becomes a trap.

You may realize too late that your “crypto” was never fully under your control - it lived inside a fintech walled garden, not on your own keys.

Account freezes: when “easy” money gets locked up

For many crypto users, this is the real nightmare scenario with fintechs: everything works… until it doesn’t. One day you’re buying Bitcoin in-app like it’s nothing, and the next day you’re logged out, your balance is blocked, and support gives you nothing but generic replies.

Traditional banks have been doing this to crypto users for years - but fintech apps can be even stricter. Their risk engines are heavily tuned to flag anything “unusual,” and crypto activity sits right at the top of that list.

You’ll find plenty of reports like these: accounts paused after a failed transfer, a burst of small trades, or an attempted withdrawal to a self-custody wallet. In many cases, users lose access for days while “security checks” run, even if they’ve been long-time customers.

PayPal, for example, has a long history of holding funds for “security reasons,” and crypto just adds more triggers. Shortly after launching its crypto feature, reports appeared of users getting slapped with 180-day holds just for trading actively. In one case, someone did around 10 crypto transactions in a week (about $10k total). PayPal flagged it as suspicious, froze the account, and locked the remaining $462 for six months - even after the user sent ID and explained every single transaction.

More recently, even withdrawals have been blocked. A customer tried to send his Bitcoin and ETH from PayPal to an external wallet and got this message:

“We can’t transfer your crypto just yet. This may happen as an added security measure.”

Support admitted it was the automated security system - and that there was nothing they could manually do. No timeline, no clear reason. His crypto sat in limbo for days. His conclusion was blunt: “If it happened to me, it will happen to you.”

What all these cases show is the same thing: when you use a fintech for crypto, you play by their rules. Their compliance teams and algorithms will always prioritize risk-avoidance over your access. A slightly bigger transfer than usual, a few fast trades, a withdrawal to a self-custody wallet - any of that can trip an automatic review.

And once you’re in that review, you’re inside a black box. You might be asked for:

• detailed source-of-funds documents,

• screenshots from other platforms,

• explanations of every transaction,

• or simply to “wait 180 days.”

Meanwhile, your money is frozen.

This is the core contradiction: fintechs market crypto as instant and convenient - but behind the scenes, they still behave like regulated payment institutions. And payment institutions freeze first, justify later.

Why does this happen? (Fintechs and the “de-risking” dilemma)

On the surface it makes no sense: these are the same companies promoting “crypto for everyone,” yet they’re the first to lock you out the moment you actually use crypto. The reason is simple: they’re not optimizing for your user experience - they’re optimizing for regulatory safety.

Fintechs sit in the same risk bucket as banks when it comes to AML, sanctions, fraud and terrorist financing. That means they’re constantly asking themselves one question: “What is the least risky option for us?” And very often, the least risky option is not to process your crypto transaction at all.

This is what the industry calls de-risking - refusing or exiting relationships that look even slightly high-risk, not because they’re illegal, but because monitoring them is costly or unclear. Crypto fits that profile perfectly: pseudonymous, cross-border, fast-moving, and sometimes going to self-custody wallets that no one else has KYC’d.

So fintechs default to the safest posture: freeze first, ask questions later.

On top of that, regulatory pressure in Europe has been going up, not down. Authorities have pushed for more traceability of crypto flows, more information on the origin and destination of funds, and better screening of counterparties. With the EU’s Travel Rule coming into play for virtual asset transfers, providers now have to collect sender/recipient data for crypto just like they do for bank wires. That means:

• more questions about whose wallet you’re sending to,

• more requests for proof of ownership,

• more automated flags when data is missing or doesn’t match.

Every extra data point is another chance for the system to say: “This doesn’t look right - stop it.”

And there’s a second layer nobody likes to admit: incentives. Most providers earn money when you buy, sell or swap crypto inside their app - through spreads, fees or premium tiers. They earn far less (or nothing) when you withdraw to your own wallet or move the funds to a competing exchange. So a tight “security” posture that keeps assets inside their walled garden conveniently aligns with their business model. Users have noticed this and said it clearly: “They’re crypto-friendly as long as you stay inside the app.”

Put all of that together (strict AML rules, automated compliance, EU-level traceability requirements, and business incentives) and you get the current reality: Fintechs love offering crypto, but they hate anything that makes crypto actually move.

More pitfalls: fees, limits and sudden changes

The troubles don’t end at freezes. Even if your account isn’t locked, using fintech for crypto brings other hidden pitfalls:

• High fees and spreads: That convenience often comes at a premium. PayPal’s crypto exchange rates and fees can be significantly higher than dedicated crypto exchanges. Revolut, on a standard (free) plan, adds fees beyond a certain monthly limit and on weekends, and often the buy/sell spread isn’t obvious. You might be paying 5-10% more in total costs without realizing it, between marked-up prices and transaction fees. Over time, this can silently eat away at your gains.

• Limits on what you can do: Fintech apps usually impose stricter limits on transactions. There might be low caps on how much crypto you can buy or withdraw in a day/week unless you upgrade to a premium account. Want to send $50k of Bitcoin to buy a car? Good luck doing that in one go through these money apps – you might find it impossible due to their internal limits, even if such a transfer would be routine on a crypto exchange (with proper verification). These limits can slow you down or prevent you from executing your strategy when timing matters.

• Not really “your” crypto: As discussed, when your crypto is custodied by a third party, there’s no guarantee you’ll have access when you need it. No private keys, no guaranteed control. Additionally, your “crypto account” isn’t a bank account – if the platform messes up or gets hacked, there’s typically no deposit insurance to make you whole. (In Revolut’s case, crypto investments “weren’t insured” under any scheme, unlike bank deposits.) You’re trusting the company’s security and integrity completely.

• Service can disappear overnight: If there’s one thing the crypto industry teaches, it’s to expect the unexpected. Fintechs may suddenly change their crypto offerings due to regulatory shifts or business decisions, leaving users in the lurch. For example, in 2023 Revolut decided to suspend all crypto services for its U.S. customers with only weeks’ notice, citing the “evolving regulatory environment” in the US.

After a certain date, American users could no longer buy, sell, or even hold crypto via Revolut – any holdings were to be automatically sold. Imagine waking up to that email if you were a U.S. user relying on Revolut! Similarly, PayPal had to pause crypto purchases for UK customers for months in 2023 to adjust to new FCA rules.

• Lack of specialized support: If something goes wrong with a crypto transaction on a fintech app, you may find their support team doesn’t have the expertise to help quickly. Crypto is just one small feature of their huge product suite. Many users report generic customer service responses that “escalate to the relevant team” (which might as well be a black hole). This is vastly different from, say, a crypto exchange where agents are trained to handle wallet issues, hash IDs, etc. With fintechs, you’re often your own support, left to figure it out or wait endlessly.

So, should you avoid fintech for crypto entirely?

It depends on your goals. If you’re just experimenting with a small amount to get a feel for Bitcoin, these platforms can offer a quick sandbox – the stakes are low, and the convenience might outweigh the downsides. However, if you’re serious about crypto (whether investing, transacting, or just holding for the long term), relying on a fintech middleman is usually asking for trouble.

These companies are ultimately centralized financial entities that play by traditional rules. They might open the crypto door for you, but they’ll also slam it shut the moment you step out of line (or sometimes for no discernible reason at all). It’s like storing your gold in someone else’s vault: it’s easy and safe until the vault owner changes the locks.

Use fintechs as on-ramps, not as vaults.

 

How to stay safe if you use fintech for crypto

While we generally recommend using proper crypto exchanges or self-custody wallets for significant funds, here are some practical tips if you find yourself using a fintech platform for crypto:

• Keep amounts small and manageable: Treat fintech-held crypto like spending money, not long-term holdings. The bigger the transaction, the more likely it is to trigger an automated review. Don’t push €10k–€50k through an app that was designed for coffee splits.

• Don’t churn frequently: Making many rapid trades or transfers in a short time frame can flag your account. For example, avoid doing “ten transactions in a week” on PayPal’s crypto service – that got one user frozen for half a year. If you need to move large volumes, do it in measured steps and give some breathing room between operations.

• Be fully KYC’d and consistent: Make sure your profile is complete, ID verified, address up to date. If the app lets you state the purpose of a transfer or pre-add a wallet, do it. The more your account looks “finished,” the less excuse they have to block you for missing information.

• Match names and accounts: This is crucial. Always move funds between accounts under the same name. If you’re withdrawing from a fintech to your bank, use your own bank account (not a friend’s or spouse’s). If depositing into a fintech from an exchange, make sure the exchange account is in your name. Mismatched names scream “third-party” and raise immediate flags about ownership (a top reason for freezes, as we noted in our previous discussion on misaligned ownership triggers).

• Prepare an “evidence pack” for source of funds: This might sound paranoid, but it can save you time if trouble strikes. Keep handy documents like screenshots of your crypto purchase history, bank statements showing the money you originally used, transaction IDs (TXIDs) of blockchain transfers, and any relevant payslips or tax filings for your income. If your account gets reviewed, being able to swiftly provide a coherent paper trail can mean the difference between a short inconvenience and a long freeze. Showing that you have nothing to hide and can account for every penny puts you in a stronger position.

• Use crypto-friendly platforms when possible: Not all exchanges or services are equal in the eyes of banks/fintechs. If you plan to cash out, it may help to use well-known, regulated crypto exchanges (CASPs) that are in compliance with new laws (MiCA, in Europe). Fintech compliance systems are more likely to accept transactions to/from a licensed exchange versus an unknown wallet or an offshore platform. It’s not foolproof, but it helps. As we suggested before, using platforms authorized under frameworks like MiCA can avoid red flags – the same logic applies here.

• Diversify your off-ramps: Don’t let one app become your single point of failure. Keep a second bank account, a second e-money account, or a proper exchange ready. You don’t want to be financially dead for a week

Finally, if you do get frozen, know your rights and steps. Fintechs in many jurisdictions have obligations similar to banks when they refuse a payment or freeze funds – often they must inform you (at least in general terms) and allow you to rectify issues, unless law forbids it.

For example, in the EU a payment service provider should give a reason for refusal and how to fix it, under regulations (with some security exceptions). So push for answers in writing. Document everything: times, messages, errors. If support is unhelpful, escalate to formal complaints channels. In some cases, customers have taken unresolved issues to financial ombudsmen or regulators when companies were unresponsive.

Knowing that you’re willing to stand up for your rights can sometimes prompt a faster resolution.

In the end, the promise of crypto is financial empowerment without gatekeepers. Ironically, inserting new gatekeepers (even flashy app-based ones) brings back old problems. So think twice about the “easy way,” because it might just lead you into a trap of frozen funds, endless verification loops, and crushing frustration. As the saying goes in crypto circles: Not your keys, not your coins. And if you entrust your coins to a fintech app, don’t be surprised when it acts more like a traditional bank – with all the same headaches.

Stay safe out there, and see you next time!