A study conducted by Amarach Research and Red Flag recently revealed that the number of people in Ireland who currently own cryptocurrencies is around 120,000, or about 2.5% of the population. This is an increase of 300% in a period of four years.
Such a remarkable growth in the adoption of cryptocurrencies in Ireland is however at risk of being curtailed. According to reports Irish banks have turned against the country’s cryptocurrency exchanges.
“Several companies providing cryptocurrency services say they have either had to stop trading or have been forced to open foreign bank accounts to keep afloat after Irish lenders refused their business,” writes The Irish Times.
Bye Irish banks, hello EU-wide banks
As a result of the banks’ actions, some cryptocurrency firms have either had to halt operations or seek banking partners from outside the country. Among the affected companies is Bitcove, a Bitcoin exchange which is based in Cork, a city in Ireland’s Munster Province. The firm has had its bank accounts shut down by lenders such as the Allied Irish Banks, Bank of Ireland and Permanent TSB. To keep its operations going Bitcove has turned to other banks in Europe.
Cryptocurrency exchange Eircoin, on the other hand, was dealt an even worse hand. One of the oldest exchanges in Ireland, the Bitcoin broker closed its doors earlier in the year. According to one of the firm’s co-founders, Dave Fleming, the closure was as a result of a banking system that is ‘negligent and defensive’.
We are being shuttered due to a negligent and defensive banking system :) but we are going out on a high. Thanks to all our customers – we'll still be here online for the foreseeable future – https://t.co/Elk2K2zrCY — Dave
— Eircoin (@eircoin) January 29, 2018
In its defense, the Bank of Ireland stated that it does not offer banking services to cryptocurrency exchanges as a matter of principle. Allied Irish Banks, on the other hand, said that while it does not discriminate against cryptocurrency firms, it is obliged to adhere to Know Your Customer and Anti-Money Laundering regulatory requirements with regards to the opening and operation of bank accounts. According to a spokesperson for the Irish lender, some cryptocurrency firms were non-compliant.
No particular policy, just KYC and AML
A banking sector group known as Banking and Payments Federation of Ireland also denied any knowledge of a policy requiring the closure of bank accounts belonging to cryptocurrency exchanges. The banking industry group, however, defended the actions of its members saying that they had no choice but to ‘lessen the risk of facilitating financial crimes’, an insinuation that Fleming did not take kindly to.
The situation is however not peculiar to Ireland and banks in other parts of the world have found themselves severing ties with cryptocurrency firms sometimes at the behest of regulators. In April, for instance, the Reserve Bank of India prohibited the financial institutions that it regulates from allowing their clients to buy cryptocurrencies. The central bank of the world’s second most populous country also ordered banks to cease offering services to cryptocurrency firms.
And in southern Africa last month, the Reserve Bank of Zimbabwe ordered the country’s financial institutions to stop processing all cryptocurrency transactions.
Featured image from Shutterstock.