An Electronic Money Institution, or EMI, is a licence, not a brand. It is a regulatory category distinct from a bank licence, and understanding that difference matters more than any single provider's marketing when a broker is deciding where to hold its operating account. A bank licence covers deposit-taking and lending. An EMI licence covers the issuing of electronic money, one unit of e-money for one unit of currency received, and the safeguarding of client funds against it, with no lending of that e-money to anyone.
Brokers look at EMI accounts constantly, usually after a bank application stalls or after a firm decides it needs multi-currency IBANs faster than a bank can open them. This is an explanation of the EMI model itself, the well-documented regulatory framework behind it, not a claim about which specific EMI will or will not accept a trading business.
What an EMI licence actually is
In the UK, EMIs are authorised and supervised by the Financial Conduct Authority. In the EU, the framework runs through the Second Electronic Money Directive, EMD2, alongside the second Payment Services Directive, PSD2, which together set out how e-money is issued, how client funds are safeguarded, and what an EMI can and cannot do with the money it holds. An EMI issues electronic money at par: one unit of e-money for one unit of fiat currency received, redeemable at face value. It cannot lend out that e-money the way a bank lends out deposits, and it cannot pay interest on e-money balances the way a savings account might.
This is what separates an EMI from a bank at the structural level, beyond branding alone. A bank takes deposits and lends a portion of them out, which is how bank lending and fractional reserve banking work. An EMI is required to safeguard client funds instead, typically by holding them in a segregated account at an authorised credit institution or in low-risk, secure assets, or by covering the balance with a comparable insurance or guarantee arrangement. Our EMI license explained guide covers the licensing process itself in more depth.
Why brokers look at EMIs
Two things pull brokers toward EMI accounts over a traditional bank. The first is speed: an EMI's onboarding process is typically built around digital verification and can move in days rather than the weeks a bank's manual underwriting process often takes. The second is currency reach: EMIs commonly issue multi-currency IBANs, letting a broker receive and hold several currencies under one account structure rather than opening a separate bank account per currency or per country.
For a broker whose client base spans several jurisdictions and currencies, that combination, faster onboarding and broader currency coverage, often outweighs the comfort of an established bank relationship, especially at the stage where the firm needs an account open quickly to start operating.
The real trade-offs
The trade-off that matters most is protection type, not convenience. A bank deposit in most jurisdictions is covered by a national deposit protection scheme up to a set limit, funded by the banking industry and triggered automatically if the bank fails. An EMI does not offer that same deposit insurance. What it offers instead is safeguarding: a legal and operational obligation on the EMI to keep client funds separate from its own money, so that if the EMI itself fails, client funds are not treated as the EMI's own assets available to its general creditors.
Safeguarding and deposit insurance are not interchangeable, and a broker should never assume one behaves like the other. Safeguarding depends on the EMI actually maintaining the segregation correctly and on the specific structure it uses, whether that is a segregated account at a bank, an insurance policy, or a guarantee arrangement. A broker relying on an EMI account should ask directly how that safeguarding is structured rather than assume it works the way deposit insurance does. Our safeguarding accounts at an EMI guide covers what that segregation does and does not cover, and EMI account refusals looks at why an EMI account can still be closed or declined even though the licence itself is not the issue.
Real-world examples of the licence category
Wise and Revolut are among the well-known fintechs that operate under e-money licences in relevant jurisdictions across Europe and the UK, which is a useful illustration of how mainstream the EMI category has become in everyday business banking. Naming them here describes the licence type they hold in general terms; it says nothing about whether either currently accepts a trading, forex or CFD business, which is a separate question each firm should check directly against that provider's own current policy before applying.
How to evaluate an EMI account as a broker
Ask three things before opening an EMI account. First, where is the licence actually held, and by which regulator, since an EMI licensed in one EU member state can passport its services across the bloc under EMD2 but the underlying supervision still sits with one national authority. Second, how is safeguarding actually structured for this specific EMI, not the category in general. Third, what does the EMI's own acceptable-use or restricted-business policy say about trading, FX or CFD activity, checked directly on the provider's own site rather than assumed from what any other EMI does.
None of this replaces how a broker actually processes client deposits or trader payouts, which runs through a separate card, crypto or PSP connection. SGHK is a software provider, not a bank or a payment processor: it introduces brokers and prop firms to card, crypto and PSP processors through its partner network and helps them get set up with the right one, without opening accounts or processing payments itself. The Broker CRM integrates any KYC provider and any card, crypto or PSP processor by API alongside eTrader, MetaTrader 4/5, cTrader, DXtrade, NinjaTrader, Match-Trader and TradeLocker.
"An EMI licence and a bank licence solve different problems by design. Ask how safeguarding is actually structured before you open the account, not after."
— The SGHK Team
Key Takeaways
- An EMI issues e-money 1:1 against safeguarded funds and cannot lend it out, unlike a bank licence built around deposit-taking and lending.
- In the UK the FCA authorises EMIs; in the EU the EMD2 and PSD2 framework governs how e-money is issued and safeguarded.
- Safeguarding separates client funds from an EMI's own money; it is not the same protection as a national deposit insurance scheme.
- Wise and Revolut are examples of well-known fintechs holding e-money licences; that says nothing about their current policy on trading businesses.
Frequently Asked Questions
What is the difference between an EMI and a bank?
A bank takes deposits and lends a portion of them out, and deposits are usually covered by a national deposit protection scheme. An EMI issues electronic money 1:1 against funds it receives, cannot lend that e-money out, and safeguards client funds by keeping them separate from its own money rather than through deposit insurance.
Who regulates EMIs?
In the UK, the Financial Conduct Authority authorises and supervises EMIs. In the EU, the framework runs through the Second Electronic Money Directive alongside the Payment Services Directive, which set out issuance, safeguarding and passporting rules across member states.
Why do brokers use EMI accounts instead of a bank account?
Two reasons come up most: faster onboarding, since EMIs typically use digital verification rather than a bank's manual underwriting process, and broader currency reach, since many EMIs offer multi-currency IBANs under one account structure.
Is money in an EMI account protected the same way as a bank deposit?
No. An EMI safeguards client funds by keeping them separate from its own operating money, which is a different protection from a national deposit insurance scheme. Ask any specific EMI how its safeguarding is structured before relying on it.
Do Wise or Revolut accept forex or CFD trading businesses?
This article names Wise and Revolut only as examples of firms holding e-money licences in Europe and the UK. Whether either currently accepts a trading business is a separate question; check each provider's own current acceptable-use or restricted-business policy directly before applying.
About SGHK
SGHK is a FinTech company that designs and builds its own software for the trading industry: the eTrader trading platform, Launch your Broker and Launch your Prop Firm. Every product is written, hosted and supported in-house and licensed to trading firms, with the CRMs branded to them, all hosted by us in the cloud, managed by each firm and built to scale across clustered servers as our clients grow. Everything is encrypted, and each firm is the only one with access to its data and its clients' data.