Two Canadian businessmen recently got some bad news from their banks.
James Grant, owner of Canadian Bitcoins, got a letter.
Melvin Ng, proprietor of CADBitcoin, got a phone call.
Both men run online exchanges where you can purchase Bitcoins for Canadian dollars.
And both were informed their businesses’ accounts frozen by Canada’s largest banks.
“It’s a weird situation,” Ng told us by phone recently. “We’re a normal Canadian business, we’re registered with the government, and a Canadian bank can just block it off.”
Grant was more blunt: “They just don’t like Bitcoins.”
As the price of Bitcoin has steadily increased and purchases with the digital currency become more commonplace, large institutions were bound to begin paying more attention to — and cracking down on — places who traffic in the currency.
Royal Bank of Canada, which shut down the accounts, sent us a statement saying they do not comment on client matters. As of this writing we had not heard back from TD Bank, the other bank that shut down or turned away the Bitcoiners.
We’ve already discussed why Bitcoin is such an extreme grey area for regulators — it’s not quite a currency, not quite a commodity, and there’s lots of interstate and international commerce involved, both of which in theory must be regulated by federal governments.
But they’ve only just begun to catch up with its explosion — Bitcoin merchants must now report all large and/or unusual transactions.
Joseph David appears to have successfully navigated the legal minefield of Bitcoin business.
The co-founder of CAVirtex, Canada’s largest real-time Bitcoin exchange (like NYSE, or more precisely, Japan’s Mt. Gox), David says he too had his company’s account shut down in its early days. But by the beginning of 2012, they were back up and running. The site now sees $15 million a day in transactions.
David believes Ng or Grant may not have obtained the proper money service licensing.
But Ng says he did just that.
Even so, he’s already moved on. He says the company plans to open what he believes will be the first ever brick-and-mortar Bitcoin stores in Canada. There will be one in Vancouver and one in downtown Toronto, he said.
That seems to be the mindset among Bitcoin professionals — press on at all costs, because Bitcoin is only going to get bigger.
“You have have $150 million worth of Bitcoins being transacted every 24 hours,” David said. “It’s not a fad.”