Topic: Can my TSB bank account be closed for trading bitcoins? (Read 4467 times)

Some US Policy examples have already been mentioned
- Cash denomination deduction
- All the AML are anti-cash
- $10K limit on cash transaction without paperwork. 
- Cash declaration at borders (but no questions wearing $100K diamond bracelet or watch)
- some part os tax code

Have you tried going to a bank and handing them cash to deposit into your friend's account?
The bank may likely tell you that they won't accept cash, but if you press them they may let you know that the grocery store or post office across the street will sell you a money order that you can deposit.  This may seem strange, but it is just a part of what you might think of as a war on cash.  Bitcoin helps this goal, and may be used to gain cooperation from governments that are seeking to define regulatory authorities for it.

I don't think the governments reasons for this are all bad, but they may have some pernicious effects on privacy and centralization of consumer transaction data.  It creates some vulnerabilities that are systemic and difficult to address.  There are unintended consequences.  Some of these problems are actually resolved by Bitcoin and its decentralized ledger...but...

This is where it gets weird though. 
The war on cash is being sold through lobbing efforts by those who have some skin in the game.  Here is an example of one of these lobbying groups.
http://betterthancash.org/about/our-members/
They will explain all the merits of a cashless society globally.  This benefits them financially as the governments will make increased use of their services.

There is no bitcoin group on that list, at least not yet.
Bitcoin has all the benefits those companies are offering and more.
It does just exactly what the governments want with respect to the merits the advocates for the war on cash are explaining to them.
Furthermore it reduces the regulatory burden because it is OPEN.  Its hashed, undeleatable transaction ledger is public, can't be shredded.

So then why do governments fight it, when in reality it is the answer to their problems, and reduce their costs more even than the options offered by these "better than cash alliance" guys?
(Did I mention the lobbying?)




From Israel:
http://www.israelnationalnews.com/News/News.aspx/172028#.VCNMaPldVyy
The government on Tuesday authorized establishment of a committee that will examine ways to eliminate cash from the Israeli economy – the better to prevent citizens from cheating on their taxes. The committee will be chaired by Harel Locker, director of the Prime Minister's Office.

Cash is easily passed from individual to individual, and transactions using cash can take place without the tax man's supervision. Not so electronic transactions; with modern computers, banks can keep tabs on how much people deposit into their accounts and how much they withdraw, while credit card companies have an up to the second record of how much people spend.

Members of the panel will include top staff from the Israel Police, the Tax Authority, the chairman of the Government Authority on Money Laundering and Terror, the Bank of Israel's income and payments director, State Attorney's office officials, and more.

According to many of these officials, cash is bad – because it allows individuals to get out of their tax payment responsibilities. Today, an enterprising tax collector cannot easily compare income and outflow. While he may suspect that a person living beyond his reported means is cheating on his taxes, there is no way to know for sure, without solid evidence. In a cashless economy, all records will be electronic, and checking who makes what and how much they owe in taxes – and collecting it before it gets to their account – will be a much simpler matter, the theory goes.

Officials in the Prime Minister's Office declared that “around the world, it is recognized that cash is a key element of the illegal economy and money laundering. It allows a wide gap between reported and actual incomes, with the corresponding effect on tax revenues.” By eliminating cash, the PMO said, “it will be possible to expand the tax base, and prevent money laundering.” The committee will study the issue from all its perspectives and make recommendations, the PMO said.

One issue the committee will be examining, the PMO said, was the imposing of administrative fees on electronic transactions, common in Israel. Whatever solutions the committee comes up with, the office said, it will ensure that individuals who have no choice in the matter will be able to make transactions in a manner that will not tack on extra expenses.
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Its everywhere, in some places more blatant.
http://mises.org/daily/6370/The-International-War-on-Cash

https://www.sc.com/ng/download/CBN-Faqs.pdf

http://translate.google.com/translate?sl=auto&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fwww.vg.no%2Fnyheter%2Futrolige-historier%2Fartikkel.php%3Fartid%3D10118319

What policies would you say that are encouraging people to use cash less? I would say that the low costs associated with paying employees directly into their bank account is causing less people to be paid in cash but this is not a policy, it is companies using lower cost services.

I agree that the unbanked do incur a lot of costs in paying their bill and getting paid. This does increase the need for more widespread acceptance of bitcoin as bitcoin payments are a lot cheaper then these kinds of services charge.

Unaware or just trolling?  OK I'll bite, there may be some people don't know about the war on cash.

The bank wins when all the money stays in banks.  When it is just the ledger transfer and you never even have the promisorry notes that are used for cash these days.
Banks win because its their money not yours, and you have to ask permission each time you want to use it, and they can always say no, or simply not answer.  If they want to they can lend it out on projects you would hate to invest in, and if they fail, they don't lose, they just replace it with "bail-in" bank stock that they issue.
Government is complicit because banks give them information secretly.  Public is not sure what is conveyed to government or when.  Bitcoin makes this all public, everyone has the same access to the block chain.

Some of the policy decisions in this effort to kill cash include. 
Denominations not keeping up with inflation.
USA largest bill us $100.  This has decreased since the Federal Reserve began.
The largest bill at that time was the $100,000 gold note

There were also $10,000, $5,000, $1000 and $500  (Yes, monopoly money 500 is not "wrong", just old)
Dollars are worth about 2% what they were worth then, so in inflation adjusted terms, that would be a 5 Million dollar bill, and all we have are these puny hundreds.
So denomination diminished 5 orders of magnitude, is your frog boiled yet?

Also, the 10000 non-reportable transaction limit has not tracked inflation
The Border crossing disclosure limits have not tracked inflation.
It is becoming ever increasingly difficult to deal in cash.

Banks are beginning to change policies (at the behest of the regulators) to increase restrictions and monitoring on cash deposits  Chase started a new policy this Spring, they expect others to follow.

Not convinced?  Its not just the USA.  Italy has reduced their cash transaction reporting limit from €2,500 to €1,000. The Italian government would have preferred to set a €500 or even €300 maximum limit but reasoned that it should permit Italians time to adjust to the new limit.  Deputy Finance Minister Vittorio Grilli said as much at a Dec. 5 2013 press conference in Rome.
In Sweden "There are towns where it isn't at all possible anymore to enter a bank and use cash," complains Curt Persson, chairman of Sweden's National Pensioners' Organization.
The deputy governor of the Swedish central bank, Lars Nyberg, gloated before his retirement last year that cash will survive “like the crocodile, even though it may be forced to see its habitat gradually cut back.”

It continues.  The more this happens, the more the world's need for Bitcoin becomes more evident.

just give them what they need, be really nice to them and it should be okay dude.  how could you possibly know that doing this and that to obtain bitcoin was a red flag for the bank?  i'm sure they won't close the account

Most payrolls are paid via check or direct deposit, but this is not a policy decision, it is a cost decision by the paying employers as this costs much less verses paying employees by cash. Employees that are paid by check can still cash the check at the issuing bank for free or a small fee.

True enough, although it seems unfair that they closed his sisters account for his transaction of all things
It seems communist in the sense that your forced to use X Bank to do X transaction and cannot use alternatives.

History's long arc tells a different story.
Once upon a time, payrolls were done in cash.
Make no mistake, despite the increasing number of unbanked, the US is very anti cash at the policy level.
That this increases costs for the unbanked also increases the need for things like bitcoin.

The US is moving in the opposite direction. An increasing percentage of the population is "unbanked" meaning they do not have a basic bank account and rely on things like check cashing services and money orders to get paid and pay bills.

I'm not sure about the US, but in the UK at least I think we're (slowly) moving in that direction i.e. banking services as a basic right, not to be withheld without good reason.  We have a financial ombudsman service that can help and the courts are always an option.

How are people discouraged from using cash? Everyone is able to spend cash with ease throughout the economy. There are very few industries that will not accept cash (airlines primarily) but this is due to logistics not from government intervention.

Yes, though I'd rather see it go the other direction.
Stop discouraging cash and non=bank transactions.
Restoring freedom of association and unbridled right to contract without intermediaries would be nicer.
Bring back the 500 dollar bill and the 1000.
Money keeps getting worth less and the bills keep getting smaller.
The 10000 border limit hasn't changed since it was created despite inflation.
We know the Fed is out of control, and there is no fiscal discipline, but the people get tighter and tighter limites even as they violate theirs with the ever expanding debt ceiling.

Rant: Since the US government is discouraging cash and other non-bank transactions and forcing people to use banks to make transactions more traceable, then banks should be treated more like utility companies and laws should be changed to disallow banks from closing a person's account without reason.

The banking agreements we sign in the USA give either party (customer or bank) the right to close an account for any reason, or even for no reason.
There is no obligation on either side to provide a reason, and there is strong incentive not to provide a reason for the bank.
Bank policy is typically to provide some notice, but it is not a requirement.

If they told you they closed the account because of bitcoin, that would be very interesting.  I suspect that is just your guess and that they didn't say it outright?

I am glad to hear this. I am also curious as to what you had to do/say in order to get your account restored.

I suspect that it somehow involved escalating the issue to the person your were talking to's manager, and their manager and potentially continued this path.

Went to the bank and it took 2 hours but the account was un-suspended! 

Banks may close down accounts when large transactions take place, they are usually done to be on the safe side however I do feel that in most cases banks are purposely closing accounts that deal with bitcoins because they are running scared. The only way you can find out if the account was suspended because of bitcoin dealings is to make an anonymous phone call and question it.

Bankers are scarred of the things they don't understand. They can just close an account without any explanation and bitcoin is a good reason as any for them.

When making a 5k cheque deposit recently i got ask "where the money had come from" -  thats just crazy right i could have sold a 2nd hand car or many other things, perhaps completed a job for someone and this was my pay cheque...

Probably they will close the account.  UK banks are pathetic like that

Yes. Your bank account can be closed for any reason, or no reason at all.

Most bank account agreements say that the bank is allowed to close your account if they see fit. To argue that they should not be able to close your account is similar to arguing that the bank should be forced to do business with someone who they don't want to do business with.