New Zealand-based bitcoin ATM operator Bitcoin Central says it has been forced to shut its doors, the result of local banks' refusal to provide financial services.
While bitcoin businesses around the world are going to great lengths to comply with new or potential digital currency regulation, they are also discovering another layer of difficulty: getting banks to supply the account services vital to the existence of any mainstream business.
The heading on Bitcoin Central's homepage now reads: "We are now closed. Please read below for the why."
Bitcoin Central had only launched its Robocoin machine at Auckland's Ironbar Cafe on 3rd June, calling it "NZ's first true Bitcoin ATM" thanks to the machine's two-way exchange facility. At the time, the company claimed "it does everything we need to make sure that we comply with NZ laws on its use".
The Robocoin machine had all its know-your-customer (KYC) and anti-money laundering (AML) functions enabled. Although all Robocoin products have the ability to scan palms and check ID documents, they are not required to be functional in some jurisdictions.
Other NZ companies feel the pain
Bitto has had its own struggles with bank account closures. Ewing said:
Ewing said as a result of this, Bitto is refocusing its efforts away from the vending machines and onto bitcoin applications, Ethereum-based smart contracts, Distributed Autonomous Organizations (DOAs) and mining upgrades.
It's not all bad news, though, he added, there is still a large degree of professional interest across related industries.
His company remained "invigorated and empowered" to explore how bitcoin could improve even more services, like employee pay, local tax, suppliers' invoices and debit cards. Bitto remained ready to look offshore for financial services if necessary.
Banks, not governments, stifling bitcoin innovation
"No doubt about it, the banksters are threatened and making business life difficult for young and innovative companies, to the detriment of advancing entirely new financial systems and rampant opportunity," Ewing said.
An unnamed banker in neighboring Australia recently revealed details on why banks often refuse bitcoin-related businesses, even those that merely accept or use bitcoin for services unrelated to finance.
The banker blamed international counter-terrorism-financing (CTF) agreements as the primary reason for banks' reluctance, especially those with partnerships or subsidiaries operating in the US. Not only must banks perform expensive due diligence on every business customer, bitcoin's lack of legal status as money means government regulators are unable to assist in investigations.
Many banks prefer simply to throw up their hands and walk away from digital currencies altogether, with some said to have written policies that specify such action.
CoinDesk contacted Bitcoin Central for comment, but had not received a response at press time.
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