BBC News reports that HSBC has closed the bank account of the Jersey-based Global Advisors Bitcoin Investment (GABI) fund. Run by the Global Advisors hedge fund, it is the first regulated Bitcoin fund.
HSBC cited money laundering risks for the closure, a not-too-uncommon phenomenon faced by digital currency exchanges.
Global Advisors' (GA) Daniel Masters went as far as to say that the closure threatens hopes of the island becoming a global center for digital currency.
Despite being fully regulated on the island, the fund also encountered difficulties when first looking to open an account. They have reportedly now found another Jersey-based bank.
Geoff Cook is chief executive of Jersey Finance, a nonprofit organization seeking to "represent and promote Jersey as an international financial centre of excellence." Without commenting on specific cases, he said that GABI reflects Jersey "as both a leading hedge fund jurisdiction and a pioneering centre for the rapidly evolving world of Fintech ."
"Bitcoin Islands" as they can be called, have not always been successful in shielding their inhabitants from bank scrutiny. Capital Treasury Services (CTS), based in Isle of Man, had their account closed, as well because bitcoin transactions flowed through it.
Speaking with DC Magnates, Global Advisors Director Jean-Marie Mognetti expressed disappointment over Jersey's original decision to only approve select banking institutions:
"As a result, most small and agile banks are excluded from the competition and you end up only with branches of big banks from the UK."
Asked if the fund is set on staying in Jersey despite the uncertain environment, Mognetti conceded that the top priority is for the fund to be able to operate:
"We got calls in the past from Continental Europe-based regulators willing to help us. We always declined discussing [the matter] with them because we love being in Jersey, but the preservation and success of our business will always be our priority."
