In another example of how global regulators are using lessons learned from the retail FX & CFD industry, more and more financial institutions are cutting off crypto exchanges (and all crypto service providers) from banking access. There seems to be few formal rules that are forcing banks to take these step, but there is clearly a behind-the-scenes push.
Similar to CFD’s being outlawed in the US, but Eligible Contract Participants having access to “Total Return Swaps“, retail investors are being restricted from cryptocurrencies, but ECP’s still have easy access.
But I wonder is it just the volatility of cryptocurency trading that is causing concern to regulators? Is it the fact that they can not easily point to intrinsic value in many ICO’s? Is it the Anti-Money Laundering aspect?
Tangentially…..there is a bit of a catch 22 going on. If and as more merchants start to accept cryptocurrency as a form of payment, volatility will drop and intrinsic value will be easier to define. But cutting off fiat to crypto conversion will slow this acceptance rate due to reduced supply of buyers who have crypto to use in purchases.
As for the AML…I get it. Crypto’s are real tough to follow and to identify; they are designed that way. But so is cash. So if the regulators overarching goal is control of money flow and knowledge of transaction participant ID’s….then they will keep pushing for fewer and fewer, globally connected institutions. And that is what I do not want to see.