Crypto Space Gets Hit With More Bad News

An outfit often referred to as The Bitcoin Bank is halting key operations in the space, raising questions about how much the move will negatively affect the space.

If the negative developments the crypto space is experiencing so far this year are any indication of what the rest of the year will look like, we’re in store for a rough ride.

The most recent development could be one of the most damaging. Metropolitan Bank Holding Corp., which is used by cryptocurrency companies and investment firms for wire transfers and deposits, says it will no longer allow for any cryptocurrency-related international wires.

Fortune reported that it was told by a Metropolitan customer that the investment firm was notified on Thursday morning that the bank was “ceasing all international crypto-related wire transfers to and from it.” The move is effective immediately. 

According to Fortune, the customer said the reason for the shutdown was due to the bank not being able to verify the compliance of international wire transfers for cryptocurrency accounts. Apparently, the bank found believable evidence that one of its clients had committed a fraudulent act associated with their account.

Damaging effects on space

Completing its IPO in November, the NYSE traded bank is considered to be the only pure play way to trade Bitcoin. That’s one of the reasons this halt is thought to have the potential to have a huge, and negative, impact on the space.

To understand the scope of how damaging this action could be for the crypto space, consider this. Coinbase is among the companies that use Metropolitan for wire transfers and deposits. There is no doubt that if this halt is permanent, it could affect the space’s growth.

Fortune made an interesting observation.

“…U.S. funds who conduct business with the bank on behalf of their international clients are currently holding investors’ money with no way to return the capital. This puts the bank and the investment firms in a precarious position.”

Setting the stage for regulations

There are also rumblings from crypto observers that what’s happened at Metropolitan could be just the tip of the iceberg. As cryptos have grown in popularity, so has interest from regulators who are trying to come up with ways to crackdown on the space.

If there was impropriety done by a Metropolitan client, it could be just the impetus regulators need to set tighter restrictions.