Wednesday, October 28, 2020

Barclays Cuts Off Coinbase As U.K. Prepares To Cut Off Europe


It was announced that Barclays Bank in the U.K. cut off cryptocurrency exchange Coinbase as a customer. This means Coinbase’s core banking relationship was severed. This is not surprising on a number of levels.

Cryptocurrency and blockchain will upend banking forever, so why would a bank do anything but freeze out blockchain companies?

This aside, corporates hate risk and everyone gets the risk of the unknown–that blockchain and crypto present.

In addition know your customer (KYC)/anti money laundering (AML), financial system protections against money laundering and other criminal activity has never been more stringent.

- Advertisement -

This clampdown on money and its flow is mainly responsible for the collapse in velocity of money, a potential hugely damaging development to the global economy, but as often happens, the response to constrain a tiny minority of bad actors ends up punishing the rest, more than the malfeasance that the regulators are trying to address.

The ease of use, speed and novelty of crypto makes banks nervous and having been fined billions for actively facilitating money laundering, they don’t want to be seen to be opening more potential channels for it.

Related: Former Barclays traders jailed for rigging Euribor rate

It is, sadly, mainly myth. The World Bank reports that only a couple percent of the criminal money in the banking system is spotted, so it seems that all the AML/KYC checks are for naught. Meanwhile money flows are choked.

The banks have no reason in general to change the picture, as for many, survival as enterprises is enough. You can see their fragility right now as the stock market corrects and the banks slump in the vanguard of big market cap losses as investors sense banks can’t take much of a recession without big consequences.

- Advertisement -

Meanwhile banks turn away blockchain banking.

Yet nothing is going to put the crypto genie back in the bottle. The systemic strangulation of the velocity of money is one of the reasons crypto has got a hold. Crypto is simply better currency for international transfers. It’s faster, it never gets lost, it’s cheaper, irreversible and it works 24/7. Why “real” money is so bad at these functions is simply a reflection of the comfy inertia of the current system

Blockchain will upend banks and guess what, banks will just morph. Crypto and blockchain will not destroy the banking industry, in the same way paper money didn’t. Banks don’t want to morph, of course, but the banks that take the lead will annihilate the banks that are late to the party. That is as predictable as you can get.

Related: Coinbase Hires Anti-Money Laundering Expert as New Chief Compliance Officer

This is also as true for countries as it is for companies.

If a country doesn’t get busy when a new technology breaks it gets left behind eating the dust of the countries that do. Europe and the U.K. and the internet? No Google, no Amazon, no Apple, no Netflix….. and not much tax to show from the presence of their outposts in their techno-colonies.

This is a crucial issue for the U.K. If the U.K.’s Brexit happens it will be cut adrift on a cold sea of independence with the U.K. simply without the scale to go toe to toe with the other big players of the world economy. The only way to go it alone is to embrace a higher level of risk and shoot for higher rewards.

Technology is the only gambit and in history it has paid off for Britain. At the beginnings of the Industrial Revolution, the U.K. had six million citizens and France 30 million. 250 years later the populations are broadly the same. England was the Silicon Valley of its day and its technological prowess upended the European balance of power.

Related: UK Announces ‘Dirty Money’ Crackdown, Including Tougher Crypto Regime

So it is eye opening that while the U.K. seems to be heading for a hard Brexit, it’s trying to kill the biggest technological revolution since the internet in its cradle because that is exactly the wrong stance for a Brexit Britain.

Small countries like Malta, Estonia and Montenegro understand what it is like to be a small country and they are doing all they can to be bases for the future high value-added activities typified by blockchain.

Great Britain, only 1% of the world population, will soon have to learn it might be “Great” but it is small too. If a meaningful Brexit happens and it looks like it will even as the “resistance-at-all-costs” mounts, then the choice is clear. Go all out for high tech or resign the country to becoming an overpopulated backwater.

It will be the U.K.’s institutions that will either actively or passively decide.


Beam Suntory Inc. fined $19.6 million in foreign bribery case

Beam Suntory Inc. (Beam), a Chicago-based company that produces and sells distilled beverages, has agreed to pay a criminal monetary penalty of $19,572,885 to...

Julius Baer to deny two former CEOs their bonuses over money laundering scandal

Julius Baer will withhold millions of francs in bonuses from its former chief executives Boris Collardi and Bernhard Hodler, as a result of a...

Goldman Sachs executives to cover part payments of $3 billion fines in 1MDB scandal

Nine current or former Goldman Sachs executives, including CEO David Solomon, will have to pay back hundreds of millions of dollars in compensation over...

Goldman Sachs agrees $3 billion settlement with US DoJ over 1MDB corruption scandal

Goldman Sachs has agreed to pay nearly $3bn (£2.3bn) in the US to end a probe of its role in Malaysia's 1MDB corruption scandal. The...

Hong Kong fines Goldman Sachs $350 million over 1MDB scandal

Goldman Sachs ignored multiple red flags over the multibillion-dollar fundraisings it arranged for state fund 1Malaysia Development Berhad, Hong Kong’s financial regulator said on...

Subscribe For More

Get our daily notification on the latest financial crimes news around the World


Latest News

This Week

Bribery trial of former San Angelo police chief Tim Vasquez delayed until 2021

The trial of former San Angelo police chief Tim Vasquez will not happen until 2021, according to court documents. The trial, originally set for...

Former Columbus mayor Eisenga charged with bank fraud

A former Columbus mayor and businessman who was once at the center of a controversial bill aimed at reducing child support payments for wealthy...

Greek ex-minister Tsochadzopoulos, wife sentenced for money laundering

Former minister Akis Tsochadzopoulos, his wife and his cousin were found guilty of money laundering by a criminal appeals court on Tuesday. Each was served...

Julius Baer to deny two former CEOs their bonuses over money laundering scandal

Julius Baer will withhold millions of francs in bonuses from its former chief executives Boris Collardi and Bernhard Hodler, as a result of a...

Adblock Detected!

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by whitelisting our website.

Enable Notifications    Ok No thanks