UK Banks Strangling Bitcoin Startups

The City of London is home to some of the worlds leading financial businesses and is no doubt the biggest centre across Europe. In fact according to the Global Financial Centres Index 2013, London ranks at a cool first place.

With that in mind one might assume that the UK would be the obvious adaptive leader for emerging financial technologies such as cryptocurrencies.

Unfortunately this is far from the case and has been confirmed by hundreds of Bitcoin related startups that have been denied business bank accounts in the UK due to the lack of crypto related regulations (and rampant bureaucracy).

Suggesting virtual currencies are too new or untested is no excuse anymore either. Cryptocurrencies are not ‘new’ at all, especially since their explosive growth in the past few years. For example Bitcoin, the most popular virtual currency to date has developed handsomely from its message board roots to becoming a mainstream digital currency that is flourishing globally with a total market cap value that is just short of £4.5 billion. Not too shabby.

Its success seems to have struck fear into the current financial community resulting in a very blasé corporate response (for the most part) despite Bitcoin related businesses extensively trying to work with banks as opposed to replacing them.

Although Bitcoin is decentralised and can effectively operate without a banking institution, it has become very obvious that banks are still required and will continue to have their place in a crypto world.

However rather than sharing ‘free hugs’ in celebration of this inevitable technology, crypto hopefuls are instead being met with pitchforks and abrupt rejections.

Is this just another show of centuries old, lethargic financial moguls flexing their power and stomping out any better alternatives.

The Financial Conduct Authority(FCA) is the independent regulatory body in the UK whose purpose is to regulate financial firms whilst providing services to consumers and maintaining the integrity of the UK’s financial markets.

The FCA has stated that it does not regulate digital currencies and has no future plans to do so.

The ramifications of not being legally authorised means banks can openly refuse support for crypto related accounts on the grounds that it is high risk money that could be associated with laundering, seamless transactions and cross border ease for financing crimes around the world.

This leaves for example Bitcoin businesses in a state of limbo where they are forced to hobble together self-regulatory protocols that are never officially approved. So despite their usefulness (and genuine legality) the wings of these services are indefinitely clipped.

It is looking more and more like the lack of regulation or guidance from the UK government is nothing more than a ruse to thwart crypto businesses and disrupt the growing ecosystem.

German based Bitcoin exchange Kraken has already signed an exclusive deal with Fidor, a bank that has seemingly taken Bitcoin by the horns and is providing a range of products in partnership with Kraken.

Bitcoin exchange Safello has already won the backing of Swedish bank ‘Handelsbanken’ which could be a hint that Scandinavian countries(highly ranked in the Index of Economic Freedom) could be early adopters of cryptocurrencies.

It remains to be seen just how long this tribal repression by the banks and UK government will continue.

MetroBank stopped working with Bitcoin exchange Intersango. Barclays also stopped working with Mtgox, Blockchain and Intersango.

Please follow and like us:

The Bank of Montreal closes it’s vault for Bitcoin Businesses

Due to government pressure The Bank of Montreal has decided to cease providing banking services for Bitcoin-related businesses.

Paul Szczesny, chief technology officer at Bitcoin exchange Cointrader was hastily informed by the bank that it’s services would no longer be provided due to a new initiative and comments made by the finance minister, Jim Fiherty. He recently stated that digital currencies could be a threat to the current financial sector in Canada.

The 2014 Canadian federal budget may be to blame for the recent change of stance on cryptocurrencies. Threats such as laundering money through Bitcoin were highlighted, although Cointrader was and still is complying with Fintrac regulations set by the bank.

The news is disheartening as The Bank of Montreal was recognised as the last Bitcoin friendly bank for businesses, but it’s safe to say it has now also crumbled under governmental pressure and has been forced to sever it’s crypto ties.

Cointrader is now seeking to relocate their operations to a non-biased financial jurisdiction to resume trading.

Please follow and like us:

India Gets The Green Light

Following a press conference organised by Bitcoins Alliance India, Unocoin,  one of the largest Bitcoin exchanges in India has been given the green light allowing users to continue accessing their accounts as of today (6th of January 2014) with regular trading commencing on the 8th January.

The conference was headed by India’s top taxation and legal expert Mr Nishith Desai, Founder & Managing Partner of Nishith Desai Associates. Mr Desai has meticulously analysed the techno-legal perspective of Bitcoin inline with current payment and currency laws and concluded that Bitcoins are in fact a legitimate currency and could provide many benefits to India’s economy.

The statement below was posted on the Unocoin website today:

After press conference organized by BAI headed by Mr. Nishith Desai, and after the take-aways of the conference are out to public through media, Mr. Nishith Desai has given us a green signal to start Unocoin operations which will be starting on 6th Jan 2014 when the logins will be enabled and Unocoin wallets will be accessible. Buying and selling of bitcoins will go live from 8th of Jan 2014. CoinMonk Ventures and Unocoin is very thankful to Nishith Desai and their team for being a part of press conference and guiding us through till here 🙂

Just before Christmas the Indian Bitcoin fever grinded to a sudden halt when the Reserve Bank of India (one of the most prominent banks) issuing a statement cautioning the public, traders and holders about the risks of dealing in the cryptocurrency.

The Reserve Bank of India is the central banking system tasked with controlling the monetary policy of the Indian rupee and are the governments ‘go to’ source regarding financial matters.

Although the bank only issued a warning, larger exchanges panicked which resulted in crypto trading grinding to a halt and access to wallets being frozen. As many put it, this was due the imminent risk of being arrested or breaking multiple foreign exchange and payment laws.

The leading Bitcoin exchange buysellbitco.in felt the full force of the Indian government four days after RBI issued a warning when their offices were raided in Ahmedabad by the Enforcement Directorate. The ED are the law enforcement agency and economic intelligence agency tasked with fighting economic and digital crime across the country.

As of today (06/01/14) buysellbitco.in still has the following message on their website:

Post the RBI circular, we are suspending buy and sell operations until we can outline a clearer framework with which to work.This is being done to protect the interest of our customers and in no way is a reflection of Bitcoin’s true potential or price.

It is yet unclear as to whether buysellbitco.in will continue trading, but we imagine most if not all exchanges will reshuffle their goals and frameworks and be trading again within the next few weeks.

All in all, great news for Bitcoin fans in India and around the world.

Mr Mahin Gupta, founder of the buysellbitco.in did not respond for comment.

“In bitcoin we trust”

 

Please follow and like us: