Precious metals purveyor Amagi Metals announced on Friday that as of mid-August, their current bank account with San Francisco headquartered Bank of the West would be closed. In the latest case of banking aversion to bitcoin, Amagi Metals stated that the basis for the account closure is the fact that Amagi Metals accepts bitcoin as a payment method, which Bank of the West views as a risk.
In their statement, Amagi Metals noted that after having had an account with BotW since 2011, they began receiving inquiries about their business last month, with the bank indicating that Amagi was a money transmitter. While the bank’s account closure notice does not apparently claim that the precious metals seller is in the business of money transmission, it indicates a line of thinking that fundamentally questions the legitimacy of any business that handles bitcoin. The news that that a bank has shut down a customer’s account based on the particulars of what payment method that business accepts has instigated a backlash against Bank of the West by the bitcoin community. This has inspired some bitcoin users to launch a hastily designed free-for-all blacklist of banks based on reports of hostility towards bitcoin related account holders.
While it is the prerogative of a bank to choose not to do business any entity based on a risk assessment, a decision to cut off a customer based on the fact that they accept a specific method of payment is unusual. When banks do arbitrarily close accounts, they often leave their disenfranchised customers with little recourse. This is poignantly evident in the case of Huntington Bank, which prompted a lawsuit from the Arab-American Civil Rights League after it allegedly shut down the accounts of hundreds of businesses and individuals with roots in the Middle East. In contrast with the Amagi Metals case, many of Huntington Banks customers were not informed of any reason behind the closures, only that they were now without a bank.
As an eCommerce business, Amagi provides its customers with a variety of payment methods. On the list are bank wires, personal checks, money orders, cashiers checks, PayPal, credit cards, and bitcoin. The last option was added in December of 2012, and three months later, the business announced on their blog that they had received the US Dollar equivalent of nearly $50,000 of sales denominated in bitcoin. While it remains to be seen exactly what it is about servicing a bitcoin-friendly business that keeps the decision-makers at Bank of the West awake at night, it is clear that this is not the first nor the last of this type of action.
In contrast with cases such as BitFloor in the United States, CaVirtex in Canada, among others around the world, Amagi Metals is not a bitcoin exchange. And in what is perhaps little consolation, its bank gave it notice before a final shutdown. In their announcement, Amagi turned to its customers to find a bitcoin (and precious metals) friendly bank. While some limited options were proffered, the challenge of finding a bank that is both knowledgeable and accepting of bitcoin is likely to remain a crucial challenge for businesses looking for their niche in the bitcoin economy.
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