Does your bank block crypto transactions? I am Peter Jendreják, Attorney-at-Law, and this is might be answer to the question why it happened.
In short:
Does the bank not allow you to make transactions in relation to crypto assets from your account or through your payment card, such as buying crypto assets (Bitcoin, Ethereum, ...) on an exchange? Or has the bank terminated your bank account maintenance contract for the given reason, or the bank does not want to open an account for you? You have your rights!
Why Crypto-Entrepreneurs Need Bank Accounts
Due to the nature of the crypto-asset business, crypto-entrepreneurs need to have current accounts maintained with the bank/banks for their activity. These entities need current accounts in banks in particular for:
a) conducting various transactions with its clients – interested in buying or selling crypto-assets (entrepreneurs (legal and natural persons) and natural persons – non-entrepreneurs) – the interested party pays the price of the crypto-assets and the crypto-entrepreneur provides the crypto-assets to the interested party, or the interested party provides the crypto-assets to the crypto-entrepreneur and the crypto-entrepreneur provides the funds to the interested party,
b) buying and selling crypto-assets through crypto-exchanges (e.g. Kraken), where it is not possible to buy with cash,
c) for the operation itself (e.g. payment of invoices to its suppliers).
When providing services by crypto-entrepreneurs, as a rule, payment services provided by banks are used.
Should Consumers Be Blocked By Banks From Transactions With Crypto Assets?
In the event that a bank client - a consumer insists on making a transaction and, for example, wants to invest in crypto assets, I believe that it is necessary to consider whether the bank is not violating legal regulations by blocking such a transaction, due to the fact that the bank cannot refuse to provide the consumer with a product that is ready for sale (proper maintenance of a bank account), and also for the following reasons.
Possible breaches by banks
Is it possible that banks' dominant position in the market, or banks' agreements/concerted practices of banks (bank coordination), is being abused in order to squeeze crypto-entrepreneurs out of the relevant market, or to slow them down, if banks have a "monopoly" on maintaining accounts for entrepreneurs and non-entrepreneurs?
Banks have a dominant position in the market in the field of bank account management. In essence, banks decide which segment can operate effectively on the market and which cannot. Nowadays, it is essentially impossible to do business properly and successfully without having a properly maintained bank account.
I believe that the activities of banks regulate sectors on the market, and in a democratic society such regulation should not belong to the banks, but to the state, which represents the citizens. If the state does not prohibit certain business activities, or allows them to be carried out under certain conditions (e.g. crypto entrepreneurs, defense industry, fossil fuel entrepreneurs), I believe that there is no reason for banks that have an exclusive license from the state (National Bank of Slovakia) to maintain bank accounts not to continue to provide this activity to a certain group of entrepreneurs, thus preventing such crypto-entrepreneurs from doing business properly. There may be actions on the part of banks that are contrary to honest business relations and undesirable regulation of business sectors.
With regard to crypto-entrepreneurs, it should be emphasized that it can happen not only that banks push crypto-entrepreneurs out of the market, but even that banks push crypto-entrepreneurs out of the relevant market, as both banks and crypto-entrepreneurs are in the financial services business. The more the market for investments in crypto assets can be developed, the less funds are left for banks to to
a) banks have covered their own funds that they need within the framework of capital adequacy – e.g. to provide loans (bank clients have less funds in their accounts);
b) banks could make money on (1) banking products (loans, term deposits, etc.), and (2) on other products intermediated by banks (mutual funds, various insurances, investing in securities, investing in gold, investing in commodities, stock exchanges, etc.),
As the funds are not invested by bank clients in the products in question, but instead in crypto assets.
The banks' actions may also affect the market within the European Union and competition may also be restricted at the level of the European Union.
It should be emphasized that it is irrelevant from the point of view of competition law whether crypto entrepreneurs are doing business legally or not. This issue has already been dealt with by the courts in the past.
The purpose of banks may be to push competition (crypto-entrepreneurs) out of the market, or to slow down competition (crypto-entrepreneurs). The area of crypto-assets is not an activity that would require its suppression - on the contrary, the legitimacy of crypto-assets has been confirmed by the adoption of Regulation (EU) 2023/1114 of the European Parliament and of the Council on markets in crypto-assets (MiCA), which concerns the regulation of crypto-assets and digital activities within the financial market.
Banking is a regulated activity. Banks in Slovakia have a monopoly on maintaining bank accounts. This position should not be abused by banks. It is not possible to abuse this position to determine what is important for society and what is not – I believe that this is what the state and the legislation that the state adopts are there for. Some banks explicitly regulate which groups of clients they will not accept and maintain accounts with, e.g. merchants within the defense industry, the gaming industry, and the like. I am of the opinion that banks should not be the entity that decides where our society will go, what is allowed and what is not (by refusing to keep accounts to certain groups, banks suppress competition and push certain industries out of the market). This is often associated with the fact that banks save costs, as the sectors in question are often associated with greater screening in the area of possible money laundering and terrorist financing (AML). However, I believe that banks – regulated entities with a monopoly on account management – cannot just pick 'icing on the cake' and reject clients with higher costs, as in my opinion this is contrary not only to fair competition, but also to fair business. If we add to this the fact that the company to which the bank refuses to provide its product is a competitor for the bank (e.g. a crypto-entrepreneur), I believe that it is all the more necessary to protect such competition in order to prevent banks from abusing their dominant position on the market.
I believe that the above interpretation, which I advocate, is also consistent with the right of entrepreneurs to the protection of their property and freedom of business, which are guaranteed by the Constitution of the Slovak Republic, and this right of entrepreneurs should prevail over the same right of banks, as otherwise the market is distorted. At the same time, banks, as regulated entities that have the exclusive right to provide certain services, should tolerate certain obligations. Banks are classified as critical infrastructure within the functioning of society - how is it possible that some industries have difficult access to these critical services?
Selected relevant legislation
1) Provision of Section 5 (1) of Slovak Act No. 187/2021 Coll. on the Protection of Competition, as amended; Article 102 of the Treaty on the Functioning of the EU.
2) Provision of Section 4 of Slovak Act No. 187/2021 Coll. on the Protection of Competition, as amended; Article 101 of the Treaty on the Functioning of the EU.
3) EU Regulation - MiCA: http://data.europa.eu/eli/reg/2023/1114/oj.
"Slow justice is no justice."
-Proverb of English lawyers
Has the bank frozen your account or withheld payment due to verification of the origin of the money (so-called AML verification)? You have your rights! I will advise you on what your options are.
― Stolen money from banking account
Banking topics:
― frozen banking account (aml screening)
Have you become a victim of fraud and lost money on your account? You have your rights! More on the website www.vykradnutyucet.sk.
― Consumer protection
Do you think that the financial institution did not treat you fairly? I will be happy to advise you on how the law views such behavior (e.g., unfair business practice, unacceptable business terms) and what your options are.