Could Digital Currency Exchanges take on the Banks through the Courts?April 28, 2018
Digital currency ventures across the board have found themselves under a range of different pressures over the course of 2018. While the previous year brought about incredible growth and much media and public attention, this year is so far definitely about the tightening of the grip that traditional institutions have on the cryptocurrency ventures.
This tightening comes in the form of regulatory oversight that is underway in many countries, but also in the way how traditional financial institutions interact with crypto companies. Recently, a wave of banks across the continents decided to stop providing services to these companies, digital currency exchanges in particular.
The same was a huge blow for any company affected and for some, especially those catering to a local market, the same activity could end up in bankruptcy. However, as an example from Chile shows, there is a way to fight back inside of a legal framework and win. Here is more about that case and also an analysis whether or not this could be useful for other companies in this industry which find themselves in a similar position.
Chile and Buda.com
In Chile, a digital currency exchange Buda.com managed to win a legal battle against one national and one private bank in the country. They previously decided to stop providing their services to the Buda.com company, which trades in bitcoin and other digital currencies, by freezing its accounts.
But, the exchange took their grievances to the courts and managed to attain a win, where the judge ordered both banks to temporarily open up its accounts. While the victory is not flawless, it shows that a cryptocurrency exchange is not outside of the protection of the law.
As Buda.come continue to work and provide its services, the banks are left with a clear warning – going after exchanges must be based on the laws. In other words, as a legitimate business, they cannot be subject to random decisions of other businesses in the country.
Using the System
It looks like many working inside of the cryptocurrency industry have an inclination to see any part of the traditional system as a nuisance at best and an active enemy as worst. This type of mentality, no matter how prevalent, is a big problem for the community. Having a us-vs-them mindset is usually a path to eventual ruin and the companies of crypto should take notice.
One of the key factors that is feeding this type of outlook is the idea that the traditional system in all of its elements is banding together to stop the revolution brought about by the digital currency technology. While this might sound plausible, it does lead to a conspiracy theory logic that is present as a hard underlying current in this idea.
The same concept sees banks, regulators and governments as a hidden but cohesive system which will fight tooth and nail to preserve its dominance over the population. Money is not just a means of transaction of value, but a social and psychological mechanism that keeps the balance of the unfair system.
Cryptocurrency is a disruptor of all of that, which is why, hidden from plain view, these different forces are banning together to stop it. Like all conspiracy theories, this has a strange and soothing flair to it, as if to tell the crypto community they are on a right path. However, the experience of history shows that where many see an organised system, there is only a chaotic string of forces working at the same time.
It is sure that some systems see cryptocurrencies as a potential threat. But, at the same time, equal or greater forces see it as an opportunity. The listing of the bitcoin futures shows this perfectly. There is money to be made in crypto and the current financial system will not forever fight it, but more likely join it.
However, the crypto community has to do something similar and join the traditional system even more firmly. Buda.com example shows that this is possible and victories can be made in the courts. But, for this to happen, a crypto exchange company must realize that the same approach is in their best interest.
Signs to the Regulators
Another big effect comes from using the courts to oppose banks – it sends a signal to the regulators and the signal is crystal clear. It says that the cryptocurrency exchanges, like any other company in a country, see themselves as legitimate business that can muster the full protection of the law.
It is enough to imagine a flower shop which was suddenly cut away from its business bank account by the same bank’s officials. If the same bank stated that they suspected that the flower shop is potentially illegal or engaged in money laundering (without any proof), there would be a huge public outcry. The shop would immediately go on the offensive with its legal team and the bank would lose, not just the particular legal content, but its public image would suffer as well.
There is absolutely no reason to perceive digital currency exchanges as anything other than a regular flower shop. Both are fully registered as a company and are working in the broader national financial system.
Some might argue that trading cryptocurrencies is unregulated, but there is no doubt that it is not illegal. Until it is, anyone doing only that is not breaking the law. That is why they should be using the same law to its fullest extent.
A Shared Initiative
The case of Buda.com should be a sign to all cryptocurrency ventures – there is a way to oppose any measure, no matter if it comes from the government or other businesses. Here, the same ventures would too well to see what took place with eSports, for example, and band up.
Acting as collectives, these companies and startup could share knowledge and experience on legal matters. They could even share resources in terms of legal teams and so forth. This way, they could fight for their rights to continue working, while together, they could also further the overall crypto agenda of gaining legitimacy.