Canadian Banks Put Pressure On The BitCoin Economy – Paxum Halts BitCoin Relationships

It has been a tough week for BitCoin.

Canadian payment processor Paxum abruptly terminated service for all BitCoin exchanges on Friday 2/10/2012. They say that their banking partners forced them to terminate all services for BitCoin businesses because the currency was too “risky”.

Quebec-based Paxum is primarily a payments processor and peer-to-peer payment provider for adult website businesses. They started working with a number of BitCoin exchanges last year, and were processors for both MtGox and TradeHill.

This looks to me like the banks (and perhaps their regulators) are afraid of money laundering through BitCoin. In an interview with BetaBeat, Paxum spokewoman Ruth Blair said “The main fears had to do with the fact that it’s a decentralized currency and as such there isn’t much control over it. In the end, it is converted to a legal tender (generally USD), but it is unclear to them how this currency is supported and who pours actual money into it, and more importantly, why.”

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About Dave

I have been into financial cryptography and alternative electronic currencies since the mid 1990s. I have attended the Financial Cryptography conference, and have invented patents in the fields of cryptography and security. I've built systems for Visa, the US Federal Reserve, NASD, and hundreds of banks around the world.

Posted on February 14, 2012, in Uncategorized and tagged , . Bookmark the permalink. Leave a comment.

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