Blockchain Firms From Gibraltar Snubbed By Royal Bank of Scotland

Blockchain, News, Regulation | January 8, 2018 By:

The Royal Bank of Scotland (RBS) has reportedly refused to process orders from blockchain firms based in Gibraltar. The news came a few days after the country started licensing distributed ledger technology (DLT) companies.

A regulatory framework for companies using DLT went into effect in Gibraltar on January 1. According to reports, local authorities approved the new rules to tap into the profits of the new cryptocurrency segment, rather than ban or ignore it. The new rules target the use of DLT for the transmission or storage of value belonging to others. Under the new rules, DLT firms are required to apply for a license from the Gibraltar Financial Services Commission (GFSC).

According to a local news outlet, the Gibraltar International Bank (GIB) received a notification that the Royal Bank of Scotland will no longer process transactions connected to blockchain firms. It has reportedly closed the clearing system for companies licensed under the new DLT framework.

Commenting on the news, Gibraltar International Bank Derek Sene said that the bank would look for another UK correspondent to establish a mechanism for processing crypto-related transfers. He said the that GIB doesn’t handle cryptocurrency itself, but it has been accepting blockchain firms as clients since October of last year.

Sene added that that making strategic decisions such as this was standard practice and that the bank would continue operating within the blockchain industry.

RBS’ decision to reject blockchain-related transactions is not particularly surprising. Last month, RBS chairman Sir Howard Davies issued a dire warning, saying bitcoin appeared to be a frothy investment bubble. “Put up the sign from Dante’s Inferno – ‘Abandon hope all ye who enter here” – that’s the only thing authorities could do about cryptocurrencies,” said Davies.

Davies argued against launching bitcoin on the US exchanges, saying some analysts believed the move would inflate the price even further, although it could also lead bitcoin to fall owing to short-selling of the currency. The RBS chairman advised the Bank of England, the US Federal Reserve, the Securities and Exchange Commission (SEC), and the European Central Bank to come together to warn people not to invest in bitcoin.