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May 2, 2013
 

Bitcoin Dealers Are In a Clash with Banks and Regulators

Bitcoin Dealers Are In a Clash with Banks and Regulators

Bitcoins first came into existence in 2009 and ever since then Canadians have been trading this digital currency. The banks and financial regulators in the country have had difficulty in regulating this uncharted world of Bitcoins.

A Calgary-based company named VirtEx, allows Canadians to trade Bitcoins. In the past year, millions of dollars in financial dealings have occurred through this web site. For VirtEx and other Bitcoin dealers, it has been a struggle to wade through the financial regulations. Especially since the Canadian government does not recognize the Bitcoin as a form of currency. Some of these web sites have even had to deal with banks closing their balance and not providing any type of reason for the closing.

Most currencies are issued through some sort of central bank and backed by the government in which they are issued. With Bitcoins, they are traded between users over various types of computer networks. Right now, the estimated worth of all the Bitcoins is around $1.5 billion; however, recent weeks have seen a huge fluctuation in value.

With the large presence of Bitcoins in the online world, major online retailers have begun accepting payment with Bitcoins. Two very popular websites, WordPress and Reddit, are among the largest online places that regularly accept Bitcoins.

This has led VirtEx and other Bitcoin dealers urge Canadians to accept the fact that people trade in this online currency.  Part of this task is convincing banks to begin accepting the fact that this online currency has real value. Since then, VirtEx has faced a major road block – the Royal Bank of Canada has closed their account. And they are not the only dealer whose bank account was closed without reason.

The owner of another Bitcoin trading website, James Grant, has said that his account at RBC was also closed without a proper explanation. He suspects that once the bank found out that his business was dealing in Bitcoins, they shut him down.  This wasn’t even the first occurrence of a bank closing his account that Grant has had to deal with, the same thing happened to his account at TD Canada.

Part of the issue that banks have with Bitcoins is that they don’t understand how they work or what they are. The people that trade in Bitcoins believe that they are a great example of how a community can regulate itself. Since there is no one person that controls Bitcoins, they can be transferred from one person to another, from any location around the world. If banks don’t begin to see the value in Bitcoins, these dealers are in for a long struggle.

If you currently live in Canada and are thinking about getting involved in the trading of Bitcoins, it may be wise to look into the policies of the bank where you conduct transactions. It would be a shame to spend a lot of time and money collecting something that can easily be taken away from you.

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