Scandinavian Crypto-Exchange on the Verge of Collapse After It Fails to Find Banking PartnersMarch 12, 2018
Image Credit: Global X-Network / Nicolas Raymond
One of Finland’s largest cryptocurrency exchanges, Prasos Oy, is being faced with a real threat of closure after several banks refuse to do further business with the company.
As things currently stand, many North European exchanges are facing similar issues due to a lack of regulations surrounding digital assets. Prasos Oy, in particular, is just a step away from having its trade activities “frozen,” since most Finnish banks claim to no longer have any legal pathway of doing business with the online exchange.
Up until now, the list of banks who have terminated their dealings with Prasos Oy include the cooperative S-Bank, Säästöpankki, and Nordea Bank AB. The reasons cited by these financial institutions for taking such steps include fears of breaching national money laundering laws.
Since its launch in 2012, Prasos has been doing very well within its native Finland. In fact, the company saw an increase of over 100% in their daily trade volume last year. However, this very spike caused banks to become wary of their dealings and led them to withdraw their support gradually.
While nations like Japan, the United States, Croatia, Switzerland have taken proactive measures to incorporate cryptocurrencies into their governance frameworks, Finland is yet to create any regulatory system that allows banks to facilitate alt-coin transactions. Due to the highly anonymous nature of these dealings, banks have withdrawn their support as they feel that they might be subject to some of the existing Finnish anti-money laundering laws (AML).
Tomi Narhinen, CEO of Säästöpankki, expressed his opinions on this issue and said:
“In most cases, it’s practically impossible or at least very hard to do business with cryptocurrency dealers and exchanges, because it can be impossible to determine the origin of the funds.”
In response to such comments, representatives from Prasos Oy have said that their company has created specific identification mechanisms, which have been in place since the beginning of March— even though the company was not obligated to implement such practices. These new protocols allow for transactions to be executed in full compliance with anti-money laundering laws and regulations
For now, Prasos has managed to streamline all client transactions through the use of one single bank account. But moving forward, this issue needs to be addressed so that potential crypto investors can regain their confidence in their government’s future vision of a digitized economy.
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