A number of Canadian bitcoin exchanges are running into regulatory challenges, as the country’s big banks move to close their accounts, in many cases without explanation.
Earlier this month, the Royal Bank of Canada closed the accounts of Calgary-based VirtEx as well as Canadian Bitcoins, an Ottawa-based bitcoin exchange. Canadian Bitcoins has also had its TD Bank account cancelled.
"They shut down our account without any reason," said VirtEx owner Joseph David told the Financial Post. "They just said we have the right to refuse service to whomever we wish."
James Grant, the owner of Canadian Bitcoins, told The Canadian Press he was given no explanation for the closure, which he says has "crippled" his business.
Grant said he is attempting to bolster his exchange's legitimacy by requiring identification from customers and reporting large transactions.
"Anti-money laundering policy is a big thing, and that's what banks are concerned about," he said. "We have invoices, and receipts, and customer documentation for every customer that we deal with."
Melvin Ng, an engineering student at the University of Waterloo and the founder of a new bitcoin exchange called CAD/Bitcoin, told the Financial Post, "Only in Canada do you get a situation where a bank can shut down your account and you're out of business."
In a press release on SBWire, Ng stated, "Banks should certainly feel threatened by this new virtual currency, as bitcoins will soon replace the need for banks to transfer money across borders. Bitcoin will revolutionize the banking industry, just like Bittorrent changed the video and music industry."
Although bitcoin is designed to work outside the traditional banking system, in reality bitcoin owners are constantly trading their virtual currencies for dollars.
The banks have declined to comment on the account closures, citing privacy reasons.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.