Saturday, November 16, 2013

Bitcoin Companies and Entrepreneurs Can't Get Bank Accounts

The US government is all over Bitcoin, you really have to be nuts to have any serious money in btc. Writes Kashmir Hill:
In the first week of July, Jay Shore got bad news. U.S. Bank and Chase informed him they were closing the accounts for his company, Coinabul, a San Diego-based precious metals buyer that sells silver and gold for Bitcoin. They didn’t want to house his half-million dollars. Chase was mum on the reason but Shore says a U.S. Bank compliance officer told him it was shutting down all small Bitcoin clients.

“They tried to force me to take a cashier’s check but I refused,” said Shore who worried he wouldn’t be able to deposit it elsewhere. He made a dozen trips to U.S. Bank because they wouldn’t give him more than $30,000 at a time. “The money is now sitting in our corporate vaults along with our metals.”[...]

“I’ve been kicked out of every major bank in New York,” says Charlie Schrem, the CEO of Bitinstant. “Chase, Wells Fargo, Citibank, U.S. Bank. And once they shut down your business account, they ban your social security number too meaning you can’t keep a personal account.”

While in Hong Kong in April, Schrem got notice from Chase that Bitinstant’s account was being suspended immediately, meaning he had to race home on a hasty flight with four connections in order to get the money into a different bank to avoid shutting down the business. Bitinstant has since suspended operations. It’s hard to pay the rent or electricity bill if you don’t have a USD bank account (at least for now).

“ Starting this summer, almost every U.S.-based startup who previously had banking was cut off if the word ‘bitcoin’ was mentioned, including simple checking for payroll and operational expenses like utilities and rent in USD,” said the Bitcoin Foundation in a statement. “The upcoming congressional hearings are timely as banks are unable to accurately asses risks without clear guidelines – leaving entrepreneurs bank less and forcing innovation overseas.”

The Bitcoin banking casualty list is a long one: popular Bitcoin – USD exchanges Bitfloor and BitInstant, in New York; Tradehill, in California; and Bitbox, in Michigan, have been out of commission for months. All had registered as money exchangers with the Department of Treasury’s FinCen, per federal guidance. Mobile Bitcoin payment company Coinapult moved from Colorado to Panama to avoid the “murky, unpredictable, and onerous” regulatory environment in the U.S., says a company representative. Capital One even shut down the merchant account for Mulligan Mint, a commemorative coin maker, when it started making physical Bitcoin silver coins; the business was not in fact dealing with Bitcoins, just making fake models of them.[...]

It’s not just businesses struggling with their banks. The Internet is littered with reports from individuals who have gotten calls from their banks after dabbling in Bitcoins, and not just in the U.S. A Swedbank customer says her account was frozen for 15 days after she sold 5 BTC through a local exchange.


  1. When Hillary gets in the White House, will we have to use Bitchcoins?

  2. Bitcoins will replace banks - why should banks enable their own demise? The solution is to not use them.

    1. P2P exchanges will solve this problem: