Bulgarians have lost all of their bitcoin exchanges overnight thanks to a sudden banking crackdown. In a well-orchestrated operation, Bulgaria’s major banks swung into action and blocked the accounts of multiple cryptocurrency exchanges.
Also read: 200,000 Unconfirmed Transactions Pile Up in Another Crazy Day for Bitcoin
Bulgarian Bankers Battle with Bitcoin
Cryptocurrency exchanges, like their crypto-loving customers, have an achilles heel: a reliance on legacy banking. Moving bitcoin around is easy. Moving fiat currency in and out of an exchange is often much harder – especially when you’ve just had your banking facilities withdrawn. On December 7, the blanket ban was reported on a Bulgarian bitcoin forum, whose moderator wrote:
We expected this to happen, but not so fast. It seems that the panic of the financial system is quite large.
Bulgaria, like its neighboring Balkan states, is a tech-savvy country that has embraced bitcoin and the financial freedom it brings. Its legacy banking system seems to have acted against the exchanges out of resentment and self-interest rather than due to orders issued at state level. In the same forum thread, the CEO of one of the affected changes replied:
UBB [bank] informed us a few days ago that they were closing down our accounts for trading in cryptocurrencies. After a conversation with one of the bank’s bosses, I realized it was the decision of the bank’s owner, it was not for regulation.
As it stands, all of the country’s exchanges are either offline or severely restricted in terms of the service they can offer, with many displaying notices explaining the situation they find themselves in. Affected exchanges include Cix.bg, Crypto.bg, and Cryptobank.bg. The latter is still trading, but can only accept funds via ewallet.
It Never Rains, It Pours
Cryptobank’s shutdown is a double blow for customers of the exchange, coming in the same week that Cryptobank.bg suspended ethereum trading due to “the Cryptokitties game that blocks transactions and passes quickly to send four times as much gas”. For Bulgarians seeking to stock up on cryptocurrency, Localbitcoins.com displays a limited number of sellers based in Sofia and Plovdiv, and there is still access to exchanges in neighboring countries via sites such as Bitcoin.de.
Bulgaria is by no means the only country to be affected by banking clampdowns on bitcoin. The stench of fear from the financial world’s old guard is almost palpable, as bitcoin’s inexorable rise heralds the shape of money to come. The Eastern European country’s banks have given cryptocurrency exchanges short shrift, but it’s likely they’ll be more accommodating when their government come to cash out its bitcoin gains. In May, a series of raids by Bulgarian law enforcement resulted in the seizure of over 213,000 BTC. Today, that haul has swollen to be worth $3.5 billion – or 6% of Bulgaria’s GDP.
Do you think banks should have the right to cut off bitcoin exchanges? Let us know in the comments section below.
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