Due to the desire of people to protect their savings during the crisis, interest in bitcoin is growing. A study by The Tokenist found that 45% of respondents from 17 countries prefer to invest in bitcoin rather than in stocks, real estate or gold. For comparison, in 2017 only 13% gave such an answer.
But there is a nuance to which insufficient attention is paid: the growth in the number of cryptocurrency users occurs due to people who are not familiar with the industry. Often people refuse to invest in digital assets for fear of blocking bank cards.
Aximetria co-founder and CEO Alex Axelrod analyzed the scenarios of possible blocking by banks and how cryptocurrency services are fighting for the rights of their users.
State interests
There are two main reasons that can lead to blocking cryptocurrency transactions. These are restrictions on the part of either the regulator or the acquirer.
A state may impose a limit or ban on:
- cryptocurrency operations themselves;
- local currency conversion, for example, into dollars or euros;
- settlements in foreign currency.
A vivid example of blocking operations with cryptocurrencies due to regulatory restrictions occurred in Argentina. In the fall of 2019, the central bank first lowered the limit on the purchase of foreign currency from $ 10,000 to $ 200 per month, then imposed a ban on the purchase of cryptocurrency from credit bank cards, and then a 30% tax on purchases in foreign currency.
As an alternative, the regulator proposed using funds transferred from a bank account to purchase cryptocurrency.
As a result, there was no formal ban on the purchase of cryptocurrency, but local banks are blocking such transactions.
In such a situation, for regulated cryptocurrency services, the only option is alternative payment systems existing on the local market. Then the cryptocurrency purchase transaction will be divided into two phases: replenishment of the local electronic wallet with a bank card and the subsequent cryptocurrency purchase from the wallet balance.
Such a transaction becomes a little more expensive, but still saves the possibility of a safe purchase of cryptocurrency. In fact, the Argentines are still forced to buy unverified cryptocurrency on LOCALBITCOINS at a completely inadequate rate.
In situations where the locks are caused only by restrictions on payments or purchases in foreign currency, you can use the service that has configured transactions for the purchase of cryptocurrency in national currency. True, there are few of them, since in this case the service must either negotiate with local acquirers in each specific country, or reach large international players who have a certificate of compliance with the payment card industry data security standards (PCI DSS).
Caution of intermediaries
If the regulator, introducing restrictions, thinks about the economy of the country as a whole, then acquirers, as representatives of business, take care of their own benefit. These financial institutions are trying to prevent transactions that are likely to be challenged as unauthorized write-offs.
Acquirers do not like card transactions without 3D Secure (transaction confirmation via SMS or push notification with a one-time code). In this case, they increase the cost of services and make transactions economically unprofitable, or completely transfer responsibility for the transactions to the cryptocurrency seller.
Sometimes this leads to situations when, for the sake of more favorable conditions, the bank tells the acquirer that its cards support 3D Secure, although in reality this is not so. Operations on such cards will also be blocked.
Acquirers restrict operations on anonymous and prepaid cards. For example, in Russia, cryptocurrency transactions from cards that do not indicate the name of the holder from Yandex.Money or QIWI are not conducted.
Acquirers may also prohibit certain types of purchases for the whole country.
The development of the cryptocurrency industry is impossible without close interaction with the world of traditional finance and regulators. Banks in this system resemble employees of visa centers who give the right to cross the border: some find fault with everything, while others welcome the cryptocurrency owners cordially.
Here is a list of the banks that, according to Aximetria, are the most digital asset friendly:
- Brazil: Nu Bank, Banco Do Brasil;
- Germany: Deutsche Kreditbank;
- Europe: Revolut and N26;
- Spain: BBVA;
- Russia: Tinkoff;
- France: Revolut, Credit Mutuel;
- Switzerland: Corner Banca;
- South Africa: Capitec Bank;
- South Korea: all banks, including Samsung Bank;
- Japan: Mitsubishi UFJ.
Recall that earlier, Aximetria introduced the AxiCheck service for checking banks for tolerance to cryptocurrency transactions.
