Coinbase Dumps CheapAir as Cull Continues - Bitsonline

Coinbase Dumps CheapAir as Cull Continues

Coinbase has taken another step forward in insulating itself from regulations that are yet to materialize by discontinuing its crypto-to-fiat service for online discount travel service CheapAir. As Coinbase dumps CheapAir, the gateway for many Americans into crypto appears to be signaling to the Securities and Exchange Commission (SEC) and the Financial Crimes Enforcement Network (Fincen) that it will do anything it can to stay compliant with any potential future regulatory obstacles it faces.

Also see: Vitalik Buterin Talks Crypto Hype, Leadership in New Interview

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Caught Between a Rock and a Hard Place

CheapAir has been accepting bitcoin since 2013. The company has appealed to its customer base for solutions to Coinbase’s decision to “no longer support “custodial” solutions for merchants”. The change will take effect within a matter of weeks. Currently, CheapAir appears to favor a relationship with BitPay, although no deal has been finalized. The online travel aggregator needs to convert bitcoin into fiat immediately to purchase tickets from airlines on its customers’ behalf. CheapAir has sold around $15 million USD worth of travel products through bitcoin since 2013.

Just as bitcoin adoption increases and customers are increasingly using it to pay for goods and services, airlines are steadfast in adhering to their retrograde business models and remain rigid in their demand for fiat currency. The industry has been at the rear-end of massive technological change for over a decade, and appears reluctant to innovate and adapt.

Air Baltic, LOT, and FAT Taiwan are the few airlines to accept bitcoin directly. California-based startup Surf Air, which uses a subscription “all-you-can-fly” model for its passengers, also accepts digital currencies. (Although, as they too are processed through Coinbase, that arrangement may present some short-term risks.)

For an industry that deals with foreign currency fluctuations and oil price movements on a daily basis, cryptocurrency volatility risk would appear manageable on the surface. But this is a prehistoric industry uncomfortable with disruptive change. It was thirty years ago now that American Airlines made the innovative discovery that changing (reducing) the passenger salad plate composition by one olive would deliver annual cost savings of $40,000. Nowadays, North American airlines don’t feed people or allow them to bring spare clothes on vacation without additional charges. Such is the pace of the industry’s capacity to adapt.Coinbase dumps CheapAir potato

Coinbase Dumps CheapAir like a Hot Wikileaks Potato

Cheapair joins Julian Assange and Wikileaks on the Coinbase sidelines. The Wikileaks Shop account was suspended by Coinbase without notice or explanation, referencing Fincen regulations. Coinbase informed Wikileaks the latter had infringed the terms and conditions of use, but those infringements were not specified. Both moves are clear evidence of Coinbase’s intention to be in the game for the long haul, to get ahead of regulations, and to become a Silicon Valley mainstay.

Unfortunately, there will be collateral damage along the way. As Coinbase dumps CheapAir and Wikileaks, some may wonder who’s next. As it expands into other areas, such as venture capital funding, Coinbase, by discontinuing some of its services, risks alienating itself from the community that made it the juggernaut it is if it becomes too flippant in its treatment of its corporate customers. It also risks creating a position in the market for a savvy competitor to occupy.

Have your say. Is Coinbase doing the right thing by protecting itself from potential regulatory action and closing down some services to merchants?


Images via Pxhere  

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