There have been posts about the Chase and Bank of America accounts closed for Bitcoin related activities and ties with Bitstamp or Coinbase.
The underlying speculation is that senior bank management sat in a board room and said “Hmm, this Bitcoin thing is a threat, instruct the minions to squash it.” Similar to the speculation about Apple and Bitcoin related apps.
The truth is that this is very unlikely. The CEOs and other Senior management at banks don’t care much about Bitcoin and don’t spend much time thinking of it.
These account closings are due to need for compliance with the BSA- Banking Secrecy Act. The BSA is the latest flavor of the day for regulators. Regulators typically focus on one thing for a while, shake down the major players for fines and fees, the industry changes policies and then the regulators move on to something else.
Market timing, after hours trading, viatacles, senior citizen marketing, derivatives, structured bond products, Patriot Act compliance, AML, soft dollar arrangements etc etc….. it goes through cycles.
Right now BSA is on the radar of the regulators….Chase is facing the brunt of the enforcement, they’ve had fines levied and are closing MANY accounts, not just Bitcoin. B of A is following suit because they know they have a target on their back.
So no…..this isn’t an effort by banking management against Bitcoin.
Even in the unlikely event that bank CEOs think it’s the “next big thing” it’s still too small to be on their radar….there is no acquisition or move which would “move the needle” for the multi-billion dollar banks. If it does take off they feel they will have plenty of time and capital to make meaningful aquisitions and moves into the space once there are billion dollar in revenue Bitcoin related businesses.
So no, the big banks are not plotting to destroy Bitcoin….they honestly don’t care about Bitcoin. These people have business unit heads, country and regional heads and others reporting to them who have people in turn reporting to them who have hundreds of product lines….all of which are larger than the value of all Bitcoin on planet earth.
A banking CEO is meeting his board, his major investors, doing media appearances….getting reports from the head of international, legal etc etc. “We have $23 billion at risk due to instability in Ukraine.” “This $45 billion joint venture in China will help us crack hundreds of billions in retail accounts.” “The SEC just fined us $1 billion.” “We will earn a $1.5 billion fee for the investment banking work we just did on Facebook’s acquisition” “This Sovreign Wealth Fund just made a $1.5 billion commitment to our hedge fund unit” “We think that long term, Africa is a growing market and recommend investing $20 billion into aquisitions”. “The EU is slowing down, we need to do 20,000 layoffs”. etc.
No where in these conversations is an executive coming to a bank CEO saying “This thing called Bitcoin is worth $7 billion and is someday going to be a threat to is, let’s squash it.”
Same goes for Apple — they closed the apps, likely not due to competitive reasons but due to fear of regulators.
Are people aware that Apple faces so much regulation that they have ON SITE US government regulators and enforcement personnel from the DOJ and others who report for work AT APPLE HEADQUARTERS full time, every day? Apple literally has teams of people who deal with government regulators all day. The fear of the apps is likely that the DOJ or any of 50 other government regulators decides that Apple is violating some rule by allowing apps and goes after them.
The regulators don’t even really care if a violation was made or what the intent of the company was….they know that an Apple sized company will almost always settle when faced with a lawsuit saying “Apple charged by DOJ for aiding and abetting money launderers” — the regulators get another $50 million or so in fees and a headline and a justification of their existence. Apples other option is to fight it….spending valuable time and $100 million in legal fees against an enemy with an unlimited taxpayer-funded budget.
For Chase and Bank of America the stakes are 100 fold larger as are the compliance efforts and fees.
Major businesses are completely governed by compliance fears and crippled by the red tape and legal concerns surrounding them.
This is the reality of the situation.