Portuguese banks ban digital currency trading – regulatory compliance is crucial

At the end of last week (August 4), news broke that several leading Portuguese banks had closed the accounts of several digital money changers.

Portuguese banks, including Santander, BCP and several others, cited risk management as the reason for account closures, although no specific information was given.

The closures took place even though the Bank of Portugal had cleared the affected companies, which included Luso Digital Assets, Mind the Coin, Criptoloja and others.

Good regulatory compliance could avoid situations like this

Although regulation is something of a bogeyman for many in the digital currency industry, it is obvious that if the industry wants to benefit from real banking services, it will have to follow the same rules as banks.

While no one wants to see crippling regulations that stifle innovation, it’s also true that few people would welcome the proceeds of crime, such as funds from money laundering, into their country’s banking systems. Decades of work have gone into extracting dirty money from the system in places like the European Union, and it’s no exaggeration to say that regulators will stop at nothing to make it happen.

So what to do? Rather than complaining about how they are “forced to bank outside of Portugal”, it would be more reasonable for the affected digital currency companies to focus on ensuring they don’t pose regulatory risks. to their banking partners. Say, for example, by adhering to the same strict AML/KYC rules and refusing to allow a shady stablecoin like Tether on their exchanges.

While it is unclear whether the affected exchanges violated any specific AML/KYC rules, it is absolutely clear that the industry as a whole has been strongly anti-regulatory and hostile to outside authority for years, portraying Bitcoin as something beyond the reach of governments and a threat to their power. Slowly, this narrative is backfiring as regulators around the world target exchanges like Coinbase (NASDAQ:COIN) and respond to perceived threats posed by the industry.

The market has spoken

What’s interesting about these account closures is that they weren’t forced by any government regulator, and while there’s no way of knowing what’s going on behind the scenes , the decision seems to have been taken by the banks in their own interest.

It is the equivalent of the free market rejecting unwanted products and services. While some industry players will choose to portray this as banks eliminating their competition, the truth is that digital currencies in their current form pose no threat to banks. In reality, Bitcoin was never meant to replace banks and banking services. The likes of BTC, ETH and other popular digital currencies are unable to pose a threat to payment processing companies due to the technical limitations of the blockchains they are built on. Just watch how Celsius Networks’ marketing slogan “Unban yourself » turned out to be a realistic view of how serious a “crypto” threat to banks might be.

So what is the real reason for account closures? This is likely a combination of a genuine concern about not violating Anti-Money Laundering and Know Your Customer regulations and a desire to cut ties with many low life criminals and those who enable them. It’s really not that complicated, the market (of Portuguese banks) has spoken, and it doesn’t like digital currency exchanges.

The biggest story arc is crystal clear

CoinGeek has been saying for years that only regulated and legally compliant blockchain and digital asset businesses will survive the ongoing regulatory onslaught. Although this narrative has been dismissed by many convinced that the industry could exist beyond the reach of governments, it is becoming clear that, just as Dr. Craig Wright and others have warned, there is ultimately no no escape from the long arm of the law. As we see with this story, regulators don’t have to go after digital currency companies directly; they just have to put a little pressure on the banks and other regulated financial institutions, and they will take care of the rest.

As the bigger picture becomes clearer, we will double down and repeat: in the years to come, regulators will press to death those who flouted AML/KYC rules and other regulations. Digital currencies like Monero will likely be banned in large parts of the world, exchanges like Binance will be kicked out of all jurisdictions, and an ever-increasing number of exchanges and trading platforms will be fined, shut down, or simply squeezed out. until they withdraw.

Those looking to build long-term sustainable businesses and applications that deliver value globally for decades need to carefully consider their options. Bitcoin SV awaits with open arms.

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