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In a chilling but sadly all-too-familiar sequence of events, UK banks have been targeting cryptocurrency owners. Individuals who have cashed out large amounts of cryptocurrency – legitimately – have had their assets frozen and accounts locked without warning, fueled by fears of money laundering and a general distrust of bitcoin. One victim even claims to have had their house raided and computer equipment seized in a follow-up operation by UK police.
The Legacy Banking War on Cryptocurrency Ramps Up
Traditional finance and cryptocurrency have been uneasy bedfellows ever since the start, but it didn’t have to be this way. While some jurisdictions have belatedly welcomed cryptocurrency with open arms – think Gibraltar, Malta, and Liechtenstein, where Binance has just opened a fiat-crypto exchange – the majority have taken an antagonistic stance. The UK is a prime example; unless you’re a bigshot like Coinbase, which recently secured a deal with Barclays, don’t count on retaining access to a bank account if you dabble in crypto. On P2P site Localbitcoins.com, UK traders exchange large amounts of BTC every day, requesting, in most instances, that the bank pay-in reference is something benign and unrelated to crypto. To do otherwise is to play a dangerous game.
This week, one British cryptocurrency figure discovered, to his peril, the speed and severity of the crackdown that’s initiated once a UK bank deems an individual to be persona non grata. The man, who we’ll refer to as John, has been involved in cryptocurrency for many years, actively mining it, occasionally trading it, and operating as a senior figure in the project team for a top 100 cryptocurrency. He has no criminal convictions, and has always accorded to UK laws concerning financial regulations and taxation. He told news.Bitcoin.com:
I had my bank account frozen and my funds taken hostage by Clydesdale Bank without any warning or explanation…I was eventually told by the branch manager that it no longer wanted to do business with “these type of people” [i.e cryptocurrency users]
Locked Out Without Warning
John explains: “I tried to log in to my Clydesdale Bank current account (the one that I’ve had since childhood) late on Tuesday evening only to be presented with a message saying “Sorry, we’re no longer able to assist you online”. I then tried the app which said “Your account is locked, please call”. I called the help center only to be told that the guy on the other end of the phone also couldn’t access my account nor confirm whether or not my (six-figure GBP) balance was safe. I was told that he was completely unable to help and that I would need to call HQ in the morning.”
He continues: “I called HQ this morning and was put on hold for 20 minutes. When the guy came back, he told me that there was a letter in the post to me and that he couldn’t say anything more about what was happening or whether or not my balance was safe. So I requested to be put through to the most senior person available, who then told me that my account had been locked down but he was unable to tell me why, nor who put the lock on my account. He refused to even tell me which department placed the block. He told me that my only option was to go into my local branch and request a manual withdrawal of funds. However he explained that such a withdrawal would need to be approved by the bank and therefore I wasn’t guaranteed to get access to my cash.”
“My local countryside branch were as clueless as you’d expect. I sat watching the assistant phone head office to try to get to the bottom of WTF was happening. HQ refused to tell her while I was present so they instead went cloak and dagger by sending an email which she had to leave the room to go and check out. After another 20 minutes and a couple of phone calls that I could hear her make from the room next door, she finally reappeared with another guy who turned out to be the branch manager.”
“These Types of People”
John explains: “The branch manager sat down and explained that the bank had reviewed the transactions coming in and out of my account and decided that it no longer wanted to do business with “these type of people”. I immediately requested full withdrawal of my not insignificant balance to which he replied that he would need to seek approval for that to happen.”
John’s experience is by no means an isolated case. In Britain, as in many other countries, cryptocurrency users are having something they’ve always known reaffirmed: you can’t trust banks with your money. Previous character, credit rating, and occupation are all worthless should a legacy financial institution take a disapproving view of your involvement in cryptocurrency. A few days prior to John being locked out by a bank he’d been with for over 20 years, another British citizen was enduring an even more harrowing encounter.
“Got raided yesterday at 6:30am for cashing out 500,000 in Bitcoin back in December 2017, arrested for money laundering and possession of criminal property in the UK,” he told fellow members of the /biz/ messageboard. When pressed for details he elaborated:
My Bitcoins that were cashed out were legit bought back in 2012/13 and they have seized some of my crypto too, seized my PC, all my USB and hard drives and raided my whole house and took me to the police station, got given a solicitor and interviewed, they asked where I found out about Bitcoin and said 4chan and a poker site.
Raided by the Police for Cashing Out
The anonymous /biz/ poster continued: “I was released [from police custody] same day at like 4pm, solicitor said shit went well and was released not on bail but was “under investigation” i.e we have fuck all on you but lol we’re holding your shit anyway. they searched my house and I believe they thought I was a drug dealer and were kind of disappointed they didn’t find anything like that so I am guessing they jumped to conclusions, it’s my bank who started this shit by freezing it.”
News.Bitcoin.com cannot verify this story, but the level of detail supplied, accompanied by a picture purportedly showing the search warrant the police presented, suggests that it is authentic. The man’s problems began when he tried to cash out from crypto, which caused Natwest bank to freeze his account. John, on the other hand, explained to news.Bitcoin.com that he had recently sold various material assets to fund a new business venture that required access to fiat. In other words, John hadn’t suddenly cashed out a large sum of cryptocurrency that might have triggered the incident. The mere possession of a reasonable sum of fiat currency, coupled with a history for selling smaller amounts of crypto, was enough.
The /biz/ poster claims to have cashed out a significant amount of bitcoin in late 2017 partly to pay taxes, which he duly did with £110,00 of the money. This didn’t prevent him from falling under suspicion however. He asserts that the police “literally kidnapped me and stole my money on the basis of “we don’t know if you’ve committed a crime to obtain this money but lol we’re seizing your assets and raided your house.””
Funds Are Safu
John’s incident ended better than he at one point expected, with Clydesdale Bank eventually transferring his money to a new bank the man had hastily joined. He concludes: “I now have all of my funds in another account which I won’t name to prevent a repeat of this ridiculous discrimination. Being treated like a criminal (without proof nor cause) by an organisation that I’ve been loyal to for over 20 years has seriously pissed me off.”
There may come a day when cryptocurrency users are treated with dignity and respect by legacy financial institutions. By the time that day arrives, however, the crypto economy may have evolved to the stage where bitcoiners may no longer need the banks that shunned them.
Do you think banks unfairly target cryptocurrency users, or are they simply doing their job? Let us know in the comments section below.
Images courtesy of Shutterstock, and /biz/.
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The post Funds Frozen, Account Closed: UK Banks Target Cryptocurrency Owners appeared first on Bitcoin News.
A growing number of cryptocurrency exchanges in India are adding stablecoins such as trueusd (TUSD) and tether (USDT) to their platforms. They are part of the solutions exchanges have come up with in order to minimize the impact of the crypto banking ban imposed by the country’s central bank.
Unocoin Adds TUSD
Unocoin, one of India’s largest crypto exchanges, announced on Wednesday the addition of TUSD to its crypto-to-crypto platform, Unodax. An ERC-20 token built on the Trusttoken platform, each TUSD is said to be backed by one USD held in reserve which can be redeemed. Unodax currently offers 23 TUSD trading pairs including BTC, BCH, ETH, LTC, and XRP.
“The decision [to add TUSD] has been taken to minimise the RBI circular’s impact on cryptocurrency investors and traders,” Inc42 reported. The Reserve Bank of India (RBI), the country’s central bank, issued the circular banning banks from providing services to crypto companies on April 6.
The publication quoted the exchange’s CEO and co-founder, Sathvik Vishwanath, commenting on the addition:
After the RBI banned bank transfers for crypto trading and investments, we were looking for the plausible solutions to help our users continue to hodl, without any disruptions and hassles.
“With trueusd, we are excited to present our users with a long-awaited stable trading plan for crypto-assets traders on our Unodax exchange,” he continued. “Crypto enthusiasts may use this stable coin as a medium of exchange for other crypto-assets and minimise their risks in a volatile market.”
Zebpay Slashes Withdrawal Fee for TUSD
Another major crypto exchange in India, Zebpay, added TUSD to its platform earlier this week, as news.Bitcoin.com previously reported.
The exchange also slashed withdrawal fees for multiple currencies. For TUSD, “withdrawal fees are zero till 31st August 2018.” Zebpay wrote:
You can now buy, sell and trade TUSD in two trading pairs: TUSD-INR and BTC-TUSD.
Wazirx Uses USDT in P2P, Adds TUSD
Crypto exchange Wazirx launched an escrowed “P2P” service on July 10 that uses tether to enable users to deposit and withdraw INR in an effort to bypass RBI’s ban. Issued on the Bitcoin blockchain via the Omni Layer protocol, each USDT is backed by one USD that Tether Limited claims is held in reserve and can be redeemed for cash. Wazirx has also added TUSD as a deposit option.
The exchange explained that USDT is used “to make stability and crazy liquidity happen,” elaborating:
While building Wazirx P2P, we realized that since crypto price fluctuations are beyond our control, we needed to bring in a stable coin…Since we wanted to add the stable coin with the highest liquidity in the global market, we’ve decided to go with tether.
More Indian Exchanges Offering TUSD and USDT
On Saturday, August 11, Zecoex announced that it has introduced the TUSD trade markets for BTC, ETH, and XRP pairs.
Coindelta has also added USDT for trading, deposits, and withdrawals. Trading against INR was enabled on July 19 and against the platform’s long list of cryptocurrencies on July 24. The exchange noted, “USDT is a stable coin, the value of USDT is always tethered to the US dollar price. This makes it easy for people to hold their funds.”
Koinex introduced TUSD on July 6 and aims for this trading market to serve as an alternative to INR as a stable currency. Users can deposit and trade TUSD against INR, BTC, ETH, and XRP. The exchange detailed:
With the absence of INR corridors, we began to find a suitable alternative to the stability of digital assets against fiat currency. After sincere efforts, we are glad to announce the introduction of trueusd (TUSD) as a stable coin on Koinex.
What do you think of Indian exchanges using stablecoins to minimize RBI’s impact? Let us know in the comments section below.
Images courtesy of Shutterstock, Unocoin, Zebpay, Wazirx, Trusttoken, and Tether.
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The post Stablecoins Gaining Popularity in India to Minimize Central Bank’s Impact appeared first on Bitcoin News.
China is opening the lending spigots as it seeks to shore up its economy for what could be a long trade fight with the U.S.
WSJ.com: What’s News Asia
Another Swiss private bank has announced in a statement that it’s open to on-board cryptocurrencies. Maerki Baumann private bank in Zurich is open to accepting assets that were generated with cryptocurrencies, “under the condition that strict regulatory and legal requirements are fully complied with,” Managing Director Stephan Zwahlen told news.Bitcoin.com.
“Switzerland Knows How to Protect Assets”
Assets raised from cryptocurrency transactions are usually rejected by most Swiss banks, but there are a few exceptions. Maerki Baumann has reportedly followed Falcon and officially accepted handling such assets, but it does not offer asset management solutions in cryptocurrencies nor accounts in crypto, the Managing Director of the bank told news.Bitcoin.com. Funds raised from speculative crypto transactions, payments for services rendered, or from mining successes are increasingly growing, together with the popularity of cryptocurrencies. But these assets reportedly often meet rejection from Swiss banks.
Vontobel, another Swiss private bank, together with Falcon, stands among the lenders that are agreeing to handle cryptocurrency-based investments on behalf of their clients.
The Swiss Contradiction
One of the contradictions about Switzerland which is aiming to become a “crypto nation” is that despite having hundreds of the most famous crypto companies worldwide based in Zug, hardly any of them have a Swiss bank account. The main reasons for that is the fear of black money that has tainted some of the major Swiss banks throughout history, Marc Bernegger, a Swiss Fintech and crypto entrepreneur, told news.Bitcoin.com in an interview in Zurich.
Bernegger has been a fintech entrepreneur for close to 20 years, and said he read Satoshi’s whitepaper in 2012. He then immediately felt that Bitcoin had a lot of potential. “I understood from day one the impact that the technology was going to have. Back in the old days, hardly anybody in the traditional financial services industry was even hearing about Bitcoin,” he said.
“Nowadays, when it comes to cryptocurrencies, there is an understanding of financial services that reminds [me of] the old banking privacy,” Bernegger said. “It isn’t about replicating that again, but I think Switzerland has a strong reputation and knowledge about protecting assets.”
However, the Swiss entrepreneur noted that one of the issues in Switzerland is that, officially, there are hardly any banks doing crypto. “Everyone goes to Bank Frick, a tiny bank in Liechtenstein, one hour away from Zurich,” Bernegger explained, but this is slowly changing, he observed. Bernegger, who is also a board member at Crypto Finance Group, is part of a task force led by Switzerland’s Finance Minister, Ueli Maurer, and Economy and Education Minister, Johann Schneider-Ammann, including federal and local officials, as well as members of various startups and legal representatives. “The initiative is aiming to create a more crypto friendly environment for companies,” Bernegger explained, “the names of the banks [involved] are not public but there are a few major [Swiss] banks and several other Swiss banks which will soon on-board crypto clients,” he revealed. “I personally think that six months from now, it will be quite common to open accounts as a corporate client doing crypto business in Switzerland.”
Finance Minister Invites Banking Association and National Bank to Discuss
“Federal Councillor Ueli Maurer recently took the initiative to invite the Swiss Banking Association (SBA), the Swiss National Bank (SNB), and the Finma Banking Supervisory Authority for a round table to discuss the issue of the banking accounts of crypto companies. As a result of this round table, SBA has formed a working group to tackle the issue and is in the lead,” Peter Minder, the head of communication of the Swiss Federal Department of Finance, told news.Bitcoin.com in an email.
Swissquote Group, the Swiss online bank, reported a profit of 25.7 million CHF (~$ 26.1million USD) from the first half of this year, which represents an increase of 44 percent over the same period of the previous year since it started accepting crypto, news.Bitcoin.com reported earlier this month. From a turnover perspective, Swissquote is reportedly one of the Swiss companies with the highest revenue out of all crypto businesses in Switzerland.
Hypothekarbank Lenzburg, a Swiss legacy bank, also opened the door to crypto and blockchain firms in June of this year. Its CEO Marianne Wildi, who trained as a computer programmer, argued that Switzerland should adopt a crypto Swiss franc. The bank also evaluated potential compliance risks before deciding to open up to blockchain and crypto firms, and also informed Finma of its decision.
Swiss Crypto Companies Target Banking Licenses
Swiss crypto companies are also actively trying to acquire banking licenses with Finma, the nation’s financial market supervisory authority, and may soon operate just like banks. It’s a matter of time, some say.
The main problem for Finma is that many of the cryptocurrency tokens are considered securities, and in order to handle securities as a broker in Switzerland, a company needs to get a broker’s licence, which seemingly no one in Switzerland within the crypto industry has at this stage. “Finma differentiates payment tokens, utility tokens, and asset-backed tokens. The payment and utility tokens aren’t considered securities,” Yassine Ben Hamida, a former Swiss banker now fully involved in crypto projects, told news.Bitcoin.com during a phone interview in Switzerland. “The problem is that you need to have a broker/dealer’s license in order to handle the tokens that are considered securities,” he confirmed.
Crypto Broker, which belongs to Crypto Finance AG, was not granted the security dealer’s license from Finma, as the company isn’t trading security tokens at the moment, its CEO said in an email. However the company is in the process of obtaining the license, it was confirmed to news.Bitcoin.com.
Crypto Fund, an asset manager also part of Crypto Finance Group, is the first company in Switzerland which is able to distribute foreign funds to “qualified investors” or so-called high net worth individuals. But they aren’t the only ones, sources involved in the Swiss crypto world say, for there are allegedly many Swiss independent companies that have launched certificates in order to invest in crypto. “This is one of our first milestones, because we are now ultimately moving to become a fully licensed Asset Manager and Broker. Crypto Finance Group is aiming at becoming the most advanced and secure investment and technology provider globally,” Mark Bernegger, who also serves as a board member at Crypto Finance Group, told news.Bitcoin.com in a statement.
Custody: How Crypto Assets Can Be Kept in Banks
Mainstream media recently reported that Goldman Sachs is considering a plan to offer custody for crypto funds, without citing any solid source. Japan’s Nomura, Bank of New York Mellon, JP Morgan Chase, and Northern Trust are all reportedly thought to be working on or exploring custody offerings. In Switzerland, there aren’t any banks at the moment offering deposit services of those securities. However, this is a market that will develop quickly, according to a former UBS executive and also a former Julius Baer executive in Switzerland.
Gazprombank Switzerland Ltd., a state-owned Russian bank, and third largest in the country by assets, is also looking into cryptocurrency asset custody service and working with auditors and with Finma, according to sources close to the matter. However, the bank couldn’t make any official statement on the topic at this stage, a spokeswoman told news.Bitcoin.com.
What do you think of Swiss crypto companies aiming to operate just like banks? Let us know in the comments section below.
Images courtesy of Shutterstock, Crypto Finance Group and Business Insider.
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The post Swiss Banks Are Onboarding Crypto Clients and Assets appeared first on Bitcoin News.
Facebook has asked large U.S. banks to share detailed financial information about customers, including card transactions and checking-account balances, as it seeks to boost user engagement.
WSJ.com: What’s News Asia
A report out Monday in the Wall Street Journal claims Facebook has asked some of America’s largest financial institutions to share their customers’ private financial data. The social giant reportedly wants data as specific as checking account balances and individual transaction information, which would be used as part of a…
A recent selloff in government bonds in Italy has highlighted renewed investor concern over the politics and banks of a country that routinely sparks regional jitters.
WSJ.com: What’s News Europe
U.S. stock indexes edged higher Wednesday morning as investors cheered Apple’s latest quarterly report, which included strong iPhone sales and a forecast that was better than expected.
Private payroll processor ADP said private businesses added 219,000 jobs in July, a strong economic signal that…
It seems that whenever members of the legacy financial establishment talk about Bitcoin these days its only to bash it in comparison to ‘Blockchain’, claiming that they can usurp the technology while ditching the cryptocurrency. However, when given a chance to actually use a blockchain-based product, the banks are also reluctant to do so.
CLS Group, which provides FX settlement services to the likes of Goldman Sachs, JPMorgan, Barclays and Citigroup, has been forced to “water down” a blockchain project two years in development due to banks’ reluctance to participate. Back in September 2016, the company announced it started working with IBM on a new settlement service, with committed support by: Banco Actinver, Bank of America, Bank of China – Hong Kong, Bank of Tokyo-Mitsubishi UFJ, Citibank, First Rand, Goldman Sachs Asset Management, HSBC, Intesa Sanpaolo, JPMorgan Chase, Morgan Stanley, Neuberger Berman and Northern Trust. Now the service is undergoing final tests ahead of a planned launch later this summer, but only about half of the originally-backing banks are expected to actually sign up in the beginning.
Alan Marquard, CLS chief strategy and development officer, explained to FN London that it was “a big ask” for banks to integrate blockchain. “You are not just installing a piece of software. They need to build operational knowledge and know-how,” and “it has security implications”. Without disclosing the cost of development, Marquard also added: “Building on new tech is always more expensive. We took the step and made this investment. Nobody has a crystal ball.”
A CLS spokeswoman responded: “It was always CLS’s intention to launch the service in phases, with the first phase clients will rely on Swift connectivity for inputs submitted to and received from CLSNet. As the service continues to grow with functionality and client adoption, and the DLT [distributed ledger technology] matures, CLSNet will enable clients to host their own node.”
Undeterred by the challenges their previous product is facing, CLS and IBM today announced a new collaboration on a proof of concept for Ledger Connect − a blockchain-based platform designed to enable banks, buy and sell side firms, fintech startups and software vendors to deploy, share and consume services hosted on a shared distributed ledger network. Users will be able to access services in areas such as, know your customer processes, sanctions screening, collateral management, derivatives post-trade processing and reconciliation and market data. Nine financial institutions, including Barclays and Citi, are said to be participating in the test.
“Together IBM and CLS have been early pioneers in advancing blockchain solutions for the financial services space,” said Marie Wieck, general manager, IBM Blockchain. “Building on the success of CLS Net and leveraging the strong relationship CLS has with the world’s leading financial institutions, Ledger Connect is uniquely positioned as a blockchain marketplace for the financial services industry, which will accelerate innovation across the ecosystem with value added services for blockchain networks.”
Is the idea of a public ledger fits at all with the current banking business? Share your thoughts in the comments section below.
Images courtesy of Shutterstock.
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Stocks on Wall Street were off to a mixed start Monday as gains in banks and energy companies were offset by losses in other sectors.
Phone companies were also higher in early trading. AT&T rose 1.9%.
Company earnings were again a focus for investors.
Heavy machinery maker Caterpillar rose 1% after…