Leading companies from the crypto sector in Ireland have complained they are being denied services by some of the country’s major financial institutions. Among the affected businesses are bitcoin exchange Bitcove, winner of the bank-sponsored “Best Business Startup” award, and Ireland’s “longest running” bitcoin broker, Eircoin.
Banks Close Accounts of Award-Winning Startup
Several Irish businesses have been forced to either stop trading cryptocurrencies or seek partners abroad after local financial institutions refused to offer them banking services. Some of them have lost their bank accounts, while others have never been allowed to open one in the country, the local press reported.
Bitcoin exchange Bitcove, which has been operating since 2014 and had previously worked with Allied Irish Banks (AIB), Permanent TSB and Bank of Ireland, is one of the affected companies, The Irish Times reported. One of its co-founders, Peter Nagle, told the newspaper the banks closed its accounts stating they do not support companies offering cryptocurrency exchange facilities. The trading platform has since been using the services of “a more progressive banking partner” in Europe.
“Particularly disappointing was Bank of Ireland. We were participants on the Ignite startup program, which is backed by the bank. Our business and its progress were reviewed monthly by a panel which included Bank of Ireland representatives. At the end of the incubator Bitcove won the award, but then just a few months later our accounts were frozen and eventually closed,” Nagle explained.
One of Ireland’s First Bitcoin Brokers Also Hit
Another crypto firm that has suffered from the clampdown is Eircoin, one of Ireland’s oldest bitcoin brokers, which closed a couple of months ago. An affiliated consulting business was also refused banking services. “We are being shuttered due to a negligent and defensive banking system,” Eircoin’s cofounder Dave Fleming said, quoted by the Irish daily. He added that his company, along with other cryptocurrency sellers, had previously consulted with the Central Bank of Ireland which told them that as long as they were abiding by the regulations their operations were in line with the law.
Bank of Ireland, one of the four largest Irish commercial banks, admitted in a statement it was not providing banking services to virtual currency exchange platforms, but noted that its customers were not prevented from transacting cryptocurrency. AIB Group, another “Big Four” bank, denied it was refusing services to companies from the crypto sector. A spokesman was quoted as saying, “We don’t discriminate in relation to providing banking services to cryptocurrency companies nor have we been systematically exiting such companies.” According to the official, some of these businesses are unable to comply with the anti-money laundering and know your customer requirements that the bank is obliged to adhere to.
The Banking and Payments Federation of Ireland (BPFI) stated that it wasn’t aware of any policy to close accounts of companies trading cryptocurrencies. However, the organization presenting 70 traditional financial institutions noted that Irish lenders are expected to take measures to minimize the risk of facilitating “financial crimes which are enabled by cryptocurrencies,” such as money laundering and terrorism financing.
The negative attitude of the legacy financial institutions towards crypto businesses sharply contrasts with the view of Ireland as a crypto-friendly jurisdiction in general. Recently, it was reported that a new government-backed platform will promote the country as a hub for developers of applications based on the technology behind cryptocurrencies. Blockchain Ireland was launched by the Irish Blockchain Expert Group in partnership with a young company called Consensys. The initiative is supported by Enterprise Ireland, the Department of Finance, members of the industry and representatives of academic institutions. The agency promoting foreign investment in the country, IDA Ireland, has also backed blockchain and crypto projects.
Cryptocurrencies and the related economic activities received another recognition by authorities in Dublin with the decision of the Irish revenue service to issue guidelines on the taxation of crypto transactions. The new “Tax and Duty Manual” clarifies related matters and confirms that in most cases the existing tax regulations apply to the crypto sector. According to the advisory, crypto incomes and profits are subject to direct taxes such as corporate tax, income tax, and capital gains tax. Officials have also stated that for VAT purposes bitcoin constitutes a currency. The Irish tax agency regards cryptocurrencies as “negotiable instruments” and exempts them from the value added tax.
Do you think the bank clampdown on crypto businesses in Ireland is temporary? Share your thoughts on the subject in the comments section below.
Images courtesy of Shutterstock, Bitcove, Eircoin, BPFI.
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