Bitcoin exchanges have been plagued by the problem of Commercial banks sometimes denying transfers affecting their functioning. Most of the times, the banks back up their actions by citing that with Bitcoin’s stature still being unregulated, they don’t want to get involved in anything that might turn out to be illegal. Most of the Bitcoin exchanges have great KYC and AML frameworks that allow them to put in the guardrails that prevent their customers from engaging in illicit activities. The question is are the banks really fearing regulation to put an end to transactions related to Bitcoin? Or is just an excuse to hamper the growth of the cryptocurrency that might outplay the banks. Whatever the case might be, the issue has escalated and is taking a toll on traditional Bitcoin exchanges. Let’s delve deeper into the dynamics of the problem and its effects:
Bitfinex’s lawsuit and the implications:
Bitfinex initially took Wells Fargo to the court for having reversed US Dollar cash deposits designated to their customer accounts coming from the exchange. The legal basis for the lawsuit lies in the fact that Bitfinex works with Taiwanese banks, including a bank called ‘Taishin’. Tashin is responsible for relaying the transfers to US customers using Wells Fargo, among others. Wells Fargo recently sent a letter to the Taiwanese bank informing them that they would no longer be accepting the deposits from these accounts until “further due diligence” was obtained.
However a week later Bitfinex withdrew the lawsuit as experts believed there was not enough legal standing for the case. However, they followed up with an announcement which announced that they would be banning withdrawals indefinitely.
Other Exchanges report the same issue:
A couple of days later major Bitcoin exchanges like BTCe and Okcoin reported the same issue. The bitcoin exchange Btc-e has announced on Twitter that it is not accepting U.S. dollar wire transfers until the end of the month. This has been attributed to a bank account problem. Following this Okcoin has also suspended US dollar deposits have been suspended because of issues with intermediary banks. The exchange has also gone on to warn the customers against making any deposits as they might be rejected. The announcement cited that the deposits will resume as the exchange find alternatives for the complication.
Third party banks de-risking or putting up a fight with Bitcoin?
Intermediary banks like Wells Fargo are known as third party banks that are responsible for these transfers. They support international transactions and transaction settlements. Since Bitcoin businesses don’t have a defined regulation, what these major banks are doing can put them in a position of risk. Hence what they are doing can be defined as ‘de-risking’ to avoid any possible legal issues. However, this might also turn out to be a move to hamper Bitcoin’s growth and its growing reputation. How exchanges will circumvent the challenges to operating smoothly again is to be seen.
During the presidential race, Republican candidate Donald J Trump came out with a set of policies that defined his ideologies and set up the foundation for a successful campaign. The economists around the world were concerned that Trump’s presidency and economic policies would result in a market collapse. Nevertheless cryptocurrency proponents were optimistic about Trump’s presidency as his policies were positive re-enforces for fintech industry. This reflected in the rise of Bitcoin prices when Trump won the elections in 2016.
President Donald Trump took to office in January and started to deliver on his promises right off the bat. Trump has signed an anti-immigrant policy in the first week of administration and this has caused a lot of ruckus amongst the populous. But this event has boosted Bitcoin prices in the most unexpected fashion and has proven positive for cryptocurrency markets. Let’s dive deep into how the policy has affected global markets and Bitcoin prices in particular.
The ban on Immigrants:
President Donald Trump signed an executive order 27th -Friday that indefinitely suspends admissions for Syrian refugees and limits the flow of other refugees into the United States by instituting what the President has called “extreme vetting” of immigrants. The order bars all persons from certain “terror-prone” countries from entering the United States for 90 days. The countries impacted due to the ban are Iran, Iraq, Syria, Sudan, Libya, Yemen and Somalia. The real blow came when even Green Card holders from the respective countries were ordered to be deported when looked into the finer details.
The petition that followed:
The order came as a surprise for many Multi-National Companies that base the core of the structure on the kind of talent diversity offers. The order wasn’t received in good stead by these companies as this would, to a little extent, result in loss of workforce for these companies. To counter these effects, major tech companies like Microsoft and Amazon have launched legal action against the executive order. Both firms have joined the Washington state government in a lawsuit challenging the details within the order. As part of the case, Microsoft, Amazon and also Expedia, are all preparing legal statements saying how the move from Trump has an impact on their business.
How Bitcoin markets benefited:
With corporate giants backing the petition, the global equity markets are in a state of apprehension. The effect of the ban has reflected in the market prices of the stocks of the highly affected companies and continues to remain in that state. With so much uncertainty surrounding the global markets, investors are looking for options to shield their assets from the impending volatility. That is where Bitcoin and Gold come into picture. Bitcoin is the digital analogue of Gold which proved out to be the Safe Haven in 2016 with better returns and non-correlation. On the same accounts, the Bitcoin prices saw a good boost over the weekend with prices approaching all time high again. Will further policies from Trump give Bitcoin the boost to breach all time high? That only time will tell.