Nearly a month to the time of writing, online Bitcoin wallet provider Cryptopay, which provides services for buying and selling Bitcoins, notified its users in the UK that deposits and withdrawals in pounds would be declined due to the "updated bank policies." Cryptopay did not state categorically the particular updates that have given rise to its current actions.
Since the rise in popularity of Bitcoin, restrictions within the UK targeting the cryptocurrency has been a recurrent event. Cryptopay is not the only exchange taking such a drastic decision. Nearly a dozen other exchanges have seen issues with UK deposits and withdrawals throughout their existence. For some reason, the UK banking system does not take kindly to Bitcoin companies.
Banks hate Bitcoin
George Basiladze of Cryptopay is of the opinion that traditional banking systems all over the world are not comfortable with Bitcoin. According to him, Barclays, one of the largest world regulators, has recently updated its policy towards private banking and e-money services and, subsequently, a wave of license revocations stroke all over.
A good example is Safello, which has passed through Barclay's own aggregator but have yet to open a bank account.
“Currently, sending just three payments with "Bitcoin" reflecting anywhere in the transaction is enough to attract a bank account closure in the UK zone.”
However, Basiladze explains that Cryptopay already puts a system in place to protect itself from the extreme decisions relating to Barclays. This is achieved by the company maintaining GBP account in reserve in another European country for situations such as that currently experienced. He notes that the hatred towards Bitcoin is a worldwide phenomenon, therefore, the said bank has also been affected by the same updated regulations.
He continues by explaining that for customers from the US, Cryptopay only recalled the deposits and withdrawals of funds from a list of options, noting that as shown in the example with Safello, such situations are not peculiar to Cryptopay as competitors are also expected to face difficulties in one form or the other.
Banks are afraid of losing control
Another point noted by Basiladze is that the goal of Cryptopay and similar services is aiding those who can't open a traditional bank account, so it's no wonder traditional banks are uncomfortable with the competition that such systems bring. Traditional banking services cherish the control that they have over the people and their money and will do everything within their powers not to let go.
Bitcoin offers a system that returns control and power to the real owners of money and the only way to fight for it is to show the will of the people - i.e. using Bitcoin and private banking services.
“Right now we're looking for a way to avoid traditional system's spokes in our wheels. It should be a stable solution for our UK clients to freely withdraw and deposit in the currency they like, whether these are pounds, dollars or Bitcoins. While waiting for a solution, our clients in the UK can send us funds through SEPA transfers.”
Banks are curious about Blockchain
Irina S. Zimakova, the co-founder and vice-president of the European Blockchain Federation, tells Cointelegraph that the perceived fierce resistance of Bitcoin by banks, in general, seems somewhat blown out of proportion. Zimakova says that the issue can be explained in multiple ways.
On a finance level, she says, Bitcoin is a finite virtual currency with front-end (e-wallet) stability issues and a scalability capped at approximately 21 mln, making it a curiosity and not a threat when compared to the trillions of euros in effect. She also notes that EU banks are experimenting with their own Bitcoin cryptocurrency, such as Dutch DNB Bank with “DNBcoin.”
Meanwhile, economically speaking, banks worldwide and, in particular, the European Central Bank wish to gain more control over evolving cryptocurrencies in an effort to manage future long-term risk.
Zimakova notes that a few weeks ago European Parliament proposed amending a directive requiring all member states to identify Bitcoin owners as of June 26, 2017, in order to halt anti-money laundering (AML) and terrorist financing. A salient detail is that a very recent Europol report explicitly states there is no evidence of ISIS using Bitcoin as a means to finance its activities.
“People as a species resist change, this is in our genes by nature. Young people averaging age 18 to 30 have idealistic views of tomorrow's world that catalyze change. Banks and politicians defy change because to them it equals risk: the many Compliance & Regulatory Directives underline their efforts to control risk. We should not be worried over Bitcoin or other cryptocurrencies, we should worry more about the Blockchain -Bitcoin's underlying technology- which will transform the world as we know it. This is why I co-founded the European Blockchain Federation: to unite all parties involved anticipating future changes through Agile-like discussions with the world thought leaders in order to ensure a hyper-intelligent and smooth transition into the digital era.”
Zimakova concludes by saying that as the acceptance of Bitcoin grows by over 100,000 merchants, the likes of Apple and Mercedes will spiral into the majority and the adoption of Bitcoin by banks, ultimately, is only a matter of time.