Bill Mew is invited to comment on a story about a retailer who is complaining about the fact that his banks closed his accounts after he traded in Bitcoin. The retailer argued that the banks’ behaviour was discriminatory, and that they were behind the times.
This is a simple case of regulation failing to keep pace with technological evolution. There are aspects of cryptocurrencies that are seen as advantages by some and issues by others. Foremost among these is the anonymity offered by many cryptocurrencies. Users see this as an advantage, but there are money launderers that would seek to exploit this advantage. Banks on the other hand would see it as an issue. Anti-Money Laundering regulations compel banks to monitor transactions for possible money laundering. With most cryptocurrency transactions being anonymised banks have no way of telling whether a transaction is potentially money laundering or not. Therefore many banks, rather than facing sanctions from the financial regulators, err on the side of caution, and treat all such transactions as potentially money laundering.
What we need are:
- Greater honesty from the Cryptocurrency exchanges. Many of them don’t have local on-shore bank accounts with which you can transact without sanction. Without greater honesty from the exchanges, it is buyer beware. If you choose to trade with one that doesn’t have a local on-shore bank accounts then you need to accept that you may face sanction.
- Greater consistency from the banks. Some of the banks will have one division happily trading in bitcoin and doing business with exchanges, while simultaneously having other divisions that act zealously against AML abuses. Their clients need to be treated fairly, with a level of consistency and to clear set of guidelines published by the bank.
- More sophisticated regulation: regulations are always to be slow to change, but bitcoin and other cryptocurrencies are now a reality and banks need to be given clear guidelines on how to balance their AML obligations with the new era in which people will want to transact in cryptocurrencies.
"I've lost thousands through credit card fraud, never lost anything through bitcoin" Scott Snaith from @50cycles accuses banks of financial discrimination amid crypto row.@BillMew believes it's a "simple case of regulation failing to keep pace with technological evolution." pic.twitter.com/p9WBlWPbEK
— RT UK (@RTUKnews) August 24, 2018