Friday, December 9, 2022

‘Bitcoin Bank’ Metropolitan Halts Crypto Wire Transfers

‘Bitcoin Bank’ Metropolitan Halts Crypto Wire Transfers

Metropolitan Bank, which provides banking services to a number of big-name bitcoin companies including Coinbase, has reportedly stopped cryptocurrency-related international wire transfers. As yet it’s not clear when, or if, transfers will resume.

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Metropolitan Bank Bitcoin Accounts Now in Doubt

The news is particularly significant as Metropolitan had a reputation for being bitcoin-friendly, even earning the nickname “The Bitcoin Bank”.

Fortune reported that the operator of an investment firm received notice from Metropolitan Bank last Thursday that it was “ceasing all international crypto-related wire transfers to and from” the bank, effective immediately.

The move, Fortune said, was due to an international fraud incident involving one of its clients — presumed to also be crypto-related, though the bank did not say explicitly.

The freeze highlights a problem legacy financial institutions have in dealing with bitcoin and digital assets, while following strict international compliance regulations. It’s a problem for cryptocurrency companies too — IdentityMind’s Neal Reiter said in a recent podcast interview that Coinbase was dealing with “20 times the fraud of PayPal”.

‘The Bitcoin Bank’ Usually Doesn’t Have a Problem With Cryptos

Coinbase uses Metropolitan, among other banks, for transfers to and from the exchange, and its Shift bitcoin debit card.

The benefit wasn’t all one-way — some commentators said the recent rise in bitcoin and cryptocurrency popularity was fueling Metropolitan’s success. Much of that was likely coming via Coinbase, the most popular crypto exchange and payments platform in the U.S. and the rest of the world.

So the bank’s sudden move to shut out crypto-related transfers wasn’t a problem with its corporate culture. More likely it was fear of sanction from government agencies if it was connected to fraudulent activity. Its parent company also recently completed an IPO, which would attract more regulatory scrutiny.

As long as bitcoin businesses have existed, banks around the world have often shut down or suspended their clients’ accounts. Specific reasons aren’t always provided, and as little as one suspicious transaction may be enough to have an account frozen. Even in “bitcoin-friendly” jurisdictions like Australia and Japan, crypto companies usually open a number of different accounts, in readiness for one suddenly shutting off its services.

Are banks too fast to shut off bitcoin services? Let’s hear your thoughts in the comments.

Images via Pixabay

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