Bulgarian bankers shut down the accounts of multiple digital currency exchanges, during a single night in a well-organized operation.
The banks took advantage of the crypto-exchanges weakness.
The virtual currency exchanges and the crypto enthusiasts have a weak point in common: the reliance on legacy banking. Transferring Bitcoin around is quite easy. However, transferring fiat currency in and out of a crypto-exchange is usually a lot harder; especially if your banking funds have just withdrawn.
On December 7, a moderator on a Bulgarian cryptocurrency form reported the ban. He mentioned that they expected it to happen, but not so fast. They didn’t expect the panic of the financial system to be so large.
Bulgaria is a tech-friendly country that initially embraced Bitcoin and the financial freedom it could bring. It seems the country’s legacy banking system acted versus the exchanges out of speculative self-interest rather than issued state’s level orders.
The CEO of one of the affected exchanges responded ιn the same forum thread. He wrote that after a conversation with one of the bank’s leaders, he realized it was not for regulation, but the decision of the bank’s owner.
All Bulgarian crypto-exchanges are offline or restricted to the services they can offer. Among the affected digital currency exchanges are Crypto.bg, Cryptobank.bg and Cix.bg. Cryptobank is still trading, but only accepting funds through ewallet.
Other countries face similar problems too.
However, Bulgaria is not the only country that has been affected by banking restrictions on Bitcoin. The banks of Eastern European countries have given digital currency exchanges short shrift. They will probably change their stance though once their government calculates its gains from Bitcoin.
In May, Bulgarian law enforcement made a series of raids, resulting in the seizure of 213,000 BTC. Currently, that amount has expanded to the value of $3.5 bln, which equals to 6% of Bulgaria’s GDP.