Companies operating in Ireland’s crypto space have been denied access to banking services. According to a report by the Irish Times, the conflict between the Irish banking system and crypto firms began about two years ago. Back then, crypto firms were complaining of a lack of access to the local banking system. Consequently, most of them were forced to open bank accounts abroad.
Escalation in Conflict
Recently, the trouble for crypto firms in Ireland took a turn for the worst after Boinnex, which is a Bitcoin ATM provider, had its AIB account closed. The firm received a letter in October 2019 informing it that since crypto was unregulated in Ireland, the bank would no longer avail its services to them. According to the AIB letter, continuing its relationship with an entity that operated in the crypto space was outside their risk appetite.
Delays in Passing Regulation
The AIB letter said that Ireland had been slow in implementing the latest anti-money laundering directives passed by the EU into Irish law. It was supposed to have implemented the directive by the end of January 2020 but that had not happened. The delay came about due to the general elections and the subsequent failure by political parties to agree on how to form a new government.
According to the founder of Boinnex, like most other crypto firms in Ireland, they have been forced to open a foreign account. He noted that some of these foreign banks charge Irish crypto firms a huge fee since they knew there was no competition from Irish banks.
He added that they had been in contact with the central bank since 2018 and paid huge legal fees to implement their AML and KYC requirements. The Boinnex founder said that the central bank had told them they were currently operating outside the law. However, it commended them for being proactive and choosing to self-regulate.
The State Has Been Promoting Blockchain Technology
Tierney, the Boinnex founder, noted that while banking had denied crypto firms access to their services, the government had been promoting blockchain technology. He pointed to the “Blockchain Week” in 2019 during which Pascal Donohoe, the finance minister said the government was supportive of the development and adoption of the blockchain.
The Irish central bank has said that it is up to a financial firm to choose where to offer its services to the crypto sector. Both AIB and the Bank of Ireland have both denied allegations that they discriminate against the central bank.
The Bank of Ireland has in the past said that it does not offer banking services to crypto firms. However, it is not opposed to its customers transacting with crypto. According to the AIB, it does not have a policy that prevents crypto firms from opening an account with them. However, it cannot provide its services to crypto firms that do not adhere to AML and KYC requirements.
Hopefully Ireland Can Follow The U.S Banks
The lack of access to banking services is a major problem for crypto companies globally. One reason for this is that most countries do not have comprehensive regulations for the industry. AS a result, financial services providers prefer to avoid the risk of offering their services to an unregulated industry, which could attract huge fines for them if a crypto firm was involved in illegality. It was reported that JP Morgan had just opened up accounts for Coinbase and Gemini.
This was a milestone in the crypto space since these exchanges have tried for years to open accounts at top banking institutions. In 2019, JP Morgan was in the same scenario as banks in Ireland in terms of not having the proper tools in place to on-board certain cryptocurrency companies. As regulations became more transparent last year, it gave these entities better direction. It's a matter of time before other countries like Ireland have the proper infrastructure in place to help these companies.
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