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Saturday, May 13, 2017

Bitcoin's Volatile Trading In Asia Tells Us A Lot About Local Banking Systems

Bitcoin

As Bitcoin gains significant traction in Japan and Korea and its price once again rallies to new highs, the currency is revealing some friction in Asia’s banking systems not easily visible to outsiders before.

As the price of a Bitcoin has, on average, increased almost 50% over the past month, it has diverged drastically between markets as traders find it increasingly difficult to move traditional currencies, or fiat, across borders.

A lawsuit filed on April 5, 2017 by Bitfinex, a B.V.I.-incorporated Bitcoin exchange, revealed that U.S. bank Wells Fargo had stopped processing U.S. dollars between Bitfinex’ Taiwanese partner banks its customers worldwide. As a private company, Wells Fargo is free to do business with whoever they please, but as the sole bank available for U.S. dollar clearance to many Taiwanese banks, getting shut out of the dollar market is a highly painful, if not existential incident.

As trading continued on Bitfinex, customers eager to remove their assets from the exchange only had the opportunity to buy and withdraw Bitcoins, driving the price of the cryptocurrency to new highs and raising unseen premiums in other exchanges and markets. A competing cryptocurrency exchange with bank accounts in Taiwan, OKCoin, also reported problems with clearing and had to limit withdrawals and deposits.

Full story at http://bit.ly/2r9UAFq

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