California-based Bitcoin services platform Swan Bitcoin issued a warning that individuals on its platform engaging with BTC mixing services might face the termination of their accounts due to heightened scrutiny from banks and custodians.
Some of its banking and custodial partners have been freezing or terminating accounts involved in mixing Bitcoin, according to the statement, which emphasized that depositing funds “directly to” or withdrawing funds “directly from” crypto mixing services could lead to the termination of the user’s account by Swan’s banking and custody partners.
Swan Bitcoin Responds to Regulatory Pressure
Citing regulatory obligations, Yan Pritzker, the Chief Technology Officer (CTO) of Swan Bitcoin, disclosed that the platform’s clients engage with qualified custodians and banks to facilitate the BTC onramp function. Currently, Swan collaborates with two qualified custodians, with a third expected to join this quarter and a fourth anticipated to be launched in 2024.
These custodians individually establish connections with multiple banking institutions to offer fiat services. However, Pritzker noted that the pool of banking institutions willing to provide services to companies in the crypto space is limited and diminishing.
While Pritzker remains a privacy advocate and even encourages the use of mixers, the exec acknowledged that the current political climate has injected fear into the banking sector, leading many banks to outright refuse dealings with anything related to “crypto.”
He further noted that banks are intensifying their Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements as a measure to sustain their operations in this evolving business landscape.
Increased Scrutiny on Bitcoin
Pritzker also pointed out the news story that was filled with inaccurate information “grossly exaggerating” Hamas funding from crypto. The CTO added that Bitcoin is an easy scapegoat for the failings of the system because it is still “poorly understood” in Washington and by the media.
It is important to note that the Swan Bitcoin exec isn’t the only one to have drawn attention to the Wall Street Journal’s inaccurate report that claimed that Hamas and affiliated terror groups had received tens of millions of dollars in cryptocurrency. Last month, stablecoin issuer Tether also set the record straight on the biases of mainstream media.
Shortly thereafter, the US Deputy Treasury Secretary Wally Adeyemo clarified that crypto isn’t primarily responsible for terrorist financing. Even expert testimonies assert funding was coming from traditional fiat channels. Despite this, “several members of Congress have used this opportunity to push for a harder look at Bitcoin.”
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