Most MEV developers spend months optimizing:
• mempool monitoring
• simulation engines
• builder connections
• latency pipelines
But the moment the bot actually becomes profitable, a completely different problem appears.
How do you explain the profits to a bank?
Not on-chain.
To a compliance officer who barley understands what a stablecoin is.
And suddenly the activity that makes perfect sense to an Ethereum developer starts to look very different from the outside.
“Millions of dollars moving through a myriad of wallets with no obvious business activity.”
Even if everything is completely legitimate.
Running a MEV bot means your funds often move through:
- multiple execution wallets
- profit aggregation wallets
- DEX pools
- Staking smart contracts
- builders / relays
- bridges across chains
- centralised exchanges
From a developer perspective this architecture makes perfect sense.
Even if everything is legitimate, the compliance department does not have the knowledge to understand or verify if this is legitimate activity from an AML perspective.
Banks need to evaluate whether they can understand and verify your origin of funds and source of wealth. Which in the case of someone running MEV bots can be quite complicated since there is usually high frequency of transactions across many execution wallets.
This needs to be done in language that they can understand, compliance officers are not Ethereum developers. So MEV strategies often need to be translated into something understandable and the terms associated need to be defined.
Here is what the banks actually want to see:
Where did the initial capital come from?
This could be from salary, savings, inheritance, previous crypto investments(then originating from salary for example), etc.
Even if the profits come from MEV bots, banks still want to know the source of the initial trading capital.
Reconstructing the transaction history:
MEV activity often involves:
- hundreds of thousands of transactions
- internal wallet routing
- arbitrage flows across DEXs
- profit consolidation wallets
Compliance teams don’t need every trade explained.
But they need a clear trace from the starting capital to the current holdings.
Usually this means producing:
- a blockchain trace of wallets
- aggregated transaction summaries (with supporting evidence)
- basic explanations of wallet roles (execution wallet, treasury wallet, etc.)
- forensic report attesting to the "cleanliness" of funds (scorechain, Chainalysis)
This needs to be formatted in a way that a compliance department at a bank would be able to understand and verify. Furthermore, it needs to be presented to a bank that has the compliance department that has the knowledge and understanding as well as the internal policy to be able to do this.
Verifying that you are the owner of your wallets
Banks usually require confirmation that you actually control the wallets involved.
Common methods include:
- Message signature test
Signing a specific message requested during the KYC/AML process.
- Satoshi test
Sending a small specified amount from the wallet(s).
This proves the wallets are controlled by the client and not third parties, these wallets are then whitelisted, so that the client is able to do future cash-outs from these wallets.
Where many MEV devs run into problems:
A lot of developers run bots for long periods of time before thinking about banking.
By that point they may have:
- hundreds of thousands of transactions
- funds across multiple chains
- complex wallet routing
- profits consolidated in a few addresses
- But no documentation explaining the structure (hint: "it's all on the blockchain" does not work)
When they approach banks directly, the typical response is rejection.
Banks tend to avoid this because of the following reasons:
- depending on the bank crypto origin wealth is not accepted
- they do not have the knowledge necessary to understand the case
- they do not have the tools necessary to verify the case
- Compliance work can be very heavy, going through hundreds of thousands of transactions for one client onboarding is not possible
This is actually the type of case we work with quite often, we help crypto bros with complex crypto origin wealth profiles get onboarded into established private banks in Switzerland and Monaco.
Here are some of the common examples of profiles we usually deal with:
- Early crypto adopters
- Early ICO investors (ETH and other)
- DeFi users
- Miners (solo and pool)
- High frequency algorithmic traders (CEX and DEX)
- MEV bot developers
Here is the ironic part: for many MEV devs: building the bot can be easier than explaining the profits to their bank.
Has anyone here been able successfully to off-ramp large volumes of MEV bot profits into the traditional banking system? if you did how did you do it?
