It’s been nine years since the first bitcoin exchange opened its domain to customers, but some of the world’s largest banks still have problems with their clients sending their money to these trading posts.
When bitcoin was in its infancy, exchanges created unexplored financial territory, and many banks were hesitant to approve wire transfers to them. They would often cite concerns about money laundering or other shady activity and either shutter or restrict the associated accounts. Exchanges themselves — along with other cryptocurrency companies — also have a rocky history with their banking providers. Sometimes untenable relations have led them to rely on the services of dubious payment processors. (As we’ve seen with Bitfinex losing $850 million to one of these middlemen, this can become a serious counterparty hazard.)
Further reading: Shadow Banking Explained: How Crypto Companies Play With Money in the Dark
While Bitcoin’s banking problem is nearly as old as its white paper, the situation isn’t improving. In fact, anecdotally at least, it seems to be getting worse.
Bitcoin Magazine has been in contact with dozens of community members whose banks have restricted or closed their accounts in response to cryptocurrency activity. Some, who turned to credit unions or payment processors as alternatives, continued to butt up against the same problem. Some are veterans of the struggle and have grievances dating back multiple years, while many others have had their run-ins in recent months.
Most of them come from the U.S. and the U.K., though we also spoke to a few from India and Canada. They’ve been barred from such banking monoliths as Wells Fargo, Citibank, Chase, HSBC, Santander and Barclays, among others; popular payment processors like PayPal, Venmo, Square, Virgin Money
