Opinion: Bank Account Closure Due to Crypto Usage is a Denial of Economic Freedoms
Social media posts and cryptocurrency news websites have recently reported a wave of anti-cryptocurrency activity from Indian banks, with widespread threats of account closures for customers who deal in cryptocurrencies. Despite the outrage, this latest act in a long line of hostile moves from India has many parallels with the policies of the Western banking industry.
Overnight Policy
The movement seemed to happen overnight; a wave of letters from banks arrived to account holders, warning them of the consequences for cryptocurrency trading. These appeared to be simple advisory letters, as the notice stated that further correspondence would not be required in the event of a policy violation (and the following account closure). Similar messages were also spotted being displayed on the screens of ATM’s of several banks, though Kotak Mahindra and Royal Bank of India seemed to appear in posts most frequently.
Closures pursuant to this announcement have already begun taking place. As social media posts regarding the edict started popping up, one in particular began to spread across Twitter, assisted by cryptocurrency personality Pomp:
“We noticed you did a transaction involving crypto, hence, we will close your account within 30 days”
– Kotak Mahindra Bank
P.S: Glad they’re doing it for me pic.twitter.com/JIWzeU54i5
A Grey Area
Understandably, the reaction to this move by the banking industry has been one of widespread anger. Many social media users have taken to Twitter and Facebook to complain, saying that Bitcoin “is all but banned” in India. This is evident in other crypto-hostile actions taken by the nation, such as the prohibition handed down from the Reserve Bank of India preventing banks from facilitating cryptocurrency transactions.
The decision was challenged in mid-2018, yet remains unresolved with a Supreme Court deadline in October 2018 already broken by the government. Unconfirmed reports suggest a plan to establish regulatory clarity within the market, a welcome change from previous governmental attitudes that can’t come soon enough. Speaking on Twitter, Indian CryptoGirl had this to say:
Foreign & Domestic
While the outrage generated of India’s latest move is genuine, much less attention has been given to the cryptocurrency policies of Western banks such as Barclays, HSBC, and Bank of America, just to name a few. Bank of America made industry news in April 2018 when they decided to close the bank account of Tim Enneking’s (Managing Director of Crypto Asset Management in San Diego) three-year-old daughter over her “risk profile” and “connection” to the crypto space, two mortal sins that did not align with BoA’s risk appetite. When interviewed by CoinDesk, Enneking pleaded with banks and “fiat-centric people” to stop their cryptocurrency paranoia:
Please stop trying to swat a fly with a sledgehammer (if you must treat crypto assets like a fly). Using a firehose to put out a match (sorry to mix metaphors) is simply bad business. The crypto space is expanding faster than any other segment of the financial sector… the motto of Bank of America should be:
Ready, Fire, Aim!
Crypto-Friendly Banking: A Necessity
While over the top, isolated incidents such as this may be a tolerable cost of business for people involved in the cryptocurrency industry. Unfortunately, this knee-jerk attitude towards cryptocurrency is far more pervasive than most people think. Conversations regarding account closures abound; news websites, forums such as Reddit and BitcoinTalk, and blogging platforms like Steemit have plenty of people talking about their bad experiences. The difference between us and India? Our banks did it quietly.
The need for a crypto-banking solution has never been clearer. As the industry continues to develop more use cases, crypto payment processers, and strategic partnerships, the systematic closure of crypto-affiliated bank accounts is increasingly a denial of economic freedoms. This is why XCH4NGE is actively working to offer our users crypto-friendly banking facilities, where you can manage your fiat and cryptocurrency side by side. The initial test trial is already underway, and high-volume businesses seeking a way to bank their crypto proceeds can apply to be part of the trial by contacting support@xch4nge.com. Open registrations for retail and business users are expected to open in Q2 of 2019.
