Financial Services Firm In Isle Of Man Shutters Bitcoin Service

Tom Burroughes

17 September 2014

Controversy around the digital peer-to-peer Bitcoin has taken another turn, this time in the Isle of Man, with news that Capital International Group’s IoM subsidiary, Capital Treasury Services, has withdrawn its services to the digital services sector.

The decision was prompted, reports said, by demands from UK banks that CTS cease trading with all such “crypto-currency” businesses. The ban by UK banks may be a temporary matter, this publication understands.
The Bitcoin exchange, Netagio, said it understood the decision was outside of CTS’s control and that CTS relies on support from the wider financial services sector.

“As we look to the future, our customers are our first priority. We have been approached by a number of alternative finance providers in other jurisdictions, who are keen to work with us, to ensure that our customers’ investments are not only protected, but also they can continue to invest in Bitcoin and trade their positions against gold and GBP on the Netagio exchange,” Simon Hamblin, chief executive of Netagio, said in a statement yesterday.

Ever since Bitcoin, a form of digital money that is designed to replicate inelastic mediums of exchange such as gold, first emerged, it has been targeted by regulators in some nations concerned about its threat to the ability of governments to control money, as well as its alleged use by criminals. Bitcoin has been championed by free marketers who argue that since governments embarked on massive monetary expansion, or quantitative easing, after 2008, normal forms of fiat money are in danger of losing value rapidly, creating the need for stronger alternatives.

The Isle of Man in June announced moves to oversee the use of Bitcoin and other forms of such digital money with a view to regularising its use rather than ban it outright or adopt a laissez faire stance.

Netagio’s Hamblin said those UK banks – whom he did not identify by name – who have withdrawn support for such currencies are mistaken.

“When we set up Netagio in June 2013, we anticipated that the world of bitcoin investments represented a new wave of innovation and enterprise for the British financial industry. Britain is making claims about its commitment to innovation, not least in the area of fintech, and yet, regrettably, the banking industry does not seem to share this commitment The sad impact is that this view – which some might argue to be anti-competitive - ultimately will drive innovation, talent and future economic benefit to other jurisdictions,” he said.

In early August, it was reported that UK finance minister George Osborne asked officials to explore how the UK could gain an innovative edge through technologies such as Bitcoin.