Finding a bank that makes it easy to buy and sell bitcoin continues to be a challenge. The problem doesn’t come as a surprise to CCN readers, given that some major banks have questioned the need for bitcoin. (Some of these same institutions have touted the benefits of blockchain technology, which strikes many observers as paradoxical.)
Bitcoin users have reported problems with buying and selling bitcoin using their bank accounts for some time, and based on a recent Merkle blog, the problem continues, notably in the United Kingdom. The blog doesn’t name any banks that are creating the problems.
Banks Act Without Warning
Banks can close accounts with little notice, the blog noted, and moving the funds out of a closed account can be challenging.
The banks are reportedly taking these actions when the customer buys or sells bitcoin using their bank account. A transaction with a message field that includes the word “bitcoin” can alert the bank to take action.
Banks can also become alarmed when a customer adds a debit card linked to a Coinbase account to their bank account.
All banks are not taking these actions. The Merkle claimed that various smaller banks are less inclined to take such actions than larger banks.
One recent Reddit post noted a problem with Lloyds, a major U.K.-based bank. The customer noticed Lloyds blocked a bitcoin transactions when they started using their debit card on Coinbase. When the customer called Lloyd’s customer support and explained the situation, Lloyd’s unblocked the transaction but said previously-blocked transactions would not go through since they were buying digital assets that might cause issues with Coinbase.
Other comments on Reddit questioned these claims, saying they were able to transfer money to bitcoin exchanges without any consequences.
What Are Bitcoin User Options?
One option bitcoin users can take when they encounter a problem with a bank is to make a cash deposit and instruct the bank to transfer the funds to a bitcoin exchange’s account. Another option is to set up a separate account strictly for bitcoin transactions.
Still another option is to find a more bitcoin-friendly bank. The Merkle notes that the German-based Fidor bank is a bitcoin-friendly bank.
Problem Persists Worldwide
Finding a bank that will work with bitcoin was cited as one of the hardest parts of starting a bitcoin business, CCN reported last April.
The problem has been especially severe in Australia.
The Australian Competition and Consumer Commission (ACCC) is investigating why some Australian banks are closing bitcoin business bank accounts, CCN reported in October. The Australian Financial Review reported that 17 bitcoin companies in Australia received letters from banks saying they planned to close their accounts. An Australian senator asked the ACCC to investigate the matter.
Bitcoin users in Poland told CCN early last year that they were facing with bank crackdowns due to bitcoin activity. BitMarket, a Polish exchange, said BPH, the national bank of Poland, shut them down because cryptocurrency activity was associated with their account.
Chinese banks closed banking services to bitcoin exchanges in 2014 despite the fact that China accounts for 80% of the world’s bitcoin trading volume, according to CCN. The People’s Bank of China ordered banks and payment processors to dissociate from bitcoin exchanges, CCN reported. Ping An Bank and China Everbright Bank announced they would suspend accounts of individuals or organizations caught participating in bitcoin or Litecoin transactions. The banks explicitly mentioned the PBOC as the source of this decision. They also called on the public at large to report any individuals or organizations involved with bitcoin or Litecoin trading.
A handful of banks claim to be open to working with bitcoin.
Toronto, Canada-based GreenBank Capital calls itself a bitcoin merchant bank and has, through a subsidiary, acquired 20% of Sovereign Exchange International, an exchange that issues virtual currency, according to proactiveinvestors.com.
Image from Shutterstock.