Monday, December 16, 2019

The Prasos Incident: Can Banks Choke Exchanges?

BTCNN aim to be the key source for both digital currency experts and newbies. With the cryptocurrency industry growing so fast we want to educate our readers about all the latest developments as they happen.

Yesterday, it was known that the Finnish exchange firm Prasos, had been severely hampered in its scope of operations, due to the closing of 4 of its 5 bank accounts, according to Bloomberg. Prasos is the biggest Finland based exchange, serving more than 50,000 customers. Having more than 8 million euros in transactions monthly, it is far from being a small exchange. So, if it happens to a booming business, it can happen to every little crypto-related business.

FIAT Necessity Is Always Real

Fiat money is still essential

A company like Prasos never lives in a void. The marketplace is like an ocean of providers reaching to others in a neverending chain of service lending. To stay in this chain, any company still must rely on fiduciary money to conduct business. Yes, crypto adoption is growing; and yes, more and more companies are accepting crypto for payments. But, in the B2B business, commodities and fiat currencies are still essential to survive in that ecosystem. So, an effective way of hampering operativity of a crypto company is cutting their supply of fiat.

The Reason

There is a great demand for bitcoin (and other cryptos) for illegal purposes and businesses. There is no denying that the anonymous characteristic of transactions with cryptos makes it especially wanted by criminals and money launderers. Cryptos are still not regulated in Finland, so banks are likely protecting themselves from future accusations of facilitating money laundering and crimes. Of course, as the government doesn’t recognize exchanges as official businesses, they cannot interfere in these kinds of affairs; and Prasos must follow and obey bank mandates.

The Solution

Finland must follow Japan’s and South Korea footsteps and start regulating cryptos and exchanges with KYC policies, to protects users and exchanges alike. Regulating crypto exchange activity and recognizing them as official exchangers can also finish the animosity between banks and them, forcing them to behave.

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