My Personal Crypto Story in Canada
I bought my first bitcoin from an individual I met at a coffee shop, after coming to an agreement online. This was a simple, and overall trust filled transaction. After handing the gentleman an envelope of cash, and he transferred me bitcoin. I started buying more bitcoin a year later from a service called CanadianBitcoins. The process was quite a bit different, I suddenly had to trust this company with the money I was giving them. They allowed me to transfer through Interac online, and purchase bitcoin directly to an address I own. The next service I used was Coinbase, which allowed me to purchase bitcoin with my credit card. The user experience was great, and the credit card transactions went off without a hitch. Coinbase has an overall good reputation in the crypto community, especially for newcomers.
Everything started to change in late 2017, when I suddenly started having my credit card transactions be rejected. I later found out that my transactions were not being rejected by the exchanges, but by my bank, and the credit card provider.
Rejected Credit Card Transactions
There are at least two reasons why a bank would block credit card transactions to cryptocurrency companies. The first reason is to protect the end consumer from cryptocurrency scandals and fraud. For me, this was not very relevant, by following simple rules, you can easily spot cryptocurrency scams. The second reason is to protect the interests of the banking institutions. If bitcoin really is a currency, then purchasing it reduces the relative strength of the unit of money that you used to purchase it. In my case, the Canadian dollar.It makes sense that banks would want to protect the currency that their entire infrastructure is built upon.
To be blunt, stopping my credit card transaction is a form of censorship. The first major instance of financial censorship occurred in 2010, when VISA stopped processing donations to the nonprofit Wikileaks. Now it seems that financial censorship has been generalized to the level of the individual, stopping regular people from investing in cryptocurrencies. The fact that purchasing cryptocurrency is being censored is one of the very reasons why we need cryptocurrency to begin with. My bank is deciding what is dangerous for me, based on what is dangerous for itself.
Rejected Wire Transfer
After the market crash in March 2020, I noticed that my daily e-transfer limit had been reduced from $2000, to $1000. This furthered my dissatisfaction with my bank, and only accelerated my longing to fully adopt cryptocurrencies as my primary method for storing value. I decided to initiate a wire transfer (greater than my daily e-transfer limit) from my bank to fund my Kraken account. The wire transfer needed to be done in person, because for some reason this cannot be done online.
I handed the teller my bank card to initiate the transaction. After telling the teller I wanted to perform a wire, they asked me a number of questions. The last question was “What is the purpose of this wire? What are you doing with this money?”. That question caught me off guard. My initial thought was, why is it any of your business what I do with my money? I decided to be honest with the teller, and I told them I was making an investment in cryptocurrency. No sooner did I get the word crypto out of my mouth, did the teller return my card to me. They informed me that they won’t be performing the wire for me today.
I asked why I can’t perform this action with my money. The teller informed me that even though it is my money, the bank reserves the right to reject any wire, for any reason. Apparently, investing in cryptocurrency is one of those reasons. Even though the use of cryptocurrencies are legal in Canada, I am not allowed to move my money to purchase it. I grew up thinking that banks were there to provide financial services and store my money for me. This experience makes me fundamentally question the meaning of ownership.
The Meaning of Ownership
What does it mean to have ownership over something? In general, I can move, alter, or dispose of the things I own, at my discretion. I am able to act freely upon the objects that I own, so long as the action does not inflict harm on others. So with respect to money, if I do truly own it, then I should not be impeded from moving it to another location. One reason why cryptocurrency is important, is because it teaches the public about direct ownership. We never really have to question what ownership is, if there is no alternative paradigm of ownership.
With cryptocurrencies, there is a saying, “Not your keys, not your crypto”. If you don’t own the keys to your crypto, then you don’t have complete and total ownership over your money. The same goes for FIAT money, the money in your bank is not truly yours. This becomes particularly evident during a bank run. Due to overlending, which is made possible by fractional reserve banking, there is not enough money in the bank if everyone withdrew at the same time.
The Millennial Distrust in Banks
Is it any wonder that millenials and gen Xers have lost trust and faith in financial institutions? Facebook IQ states that 45% of millenials are ready to switch banks if a better option comes along. Fueled first by the 2008 financial crisis that millenials experienced during their formative years, widespread distrust is pushing the younger generations to trust tech, more than banks. Financial freedom doesn’t just mean you have the money to do what you want, when you want to do it. If you can’t move the money because a bank is protecting their interests, then how truly free are your finances?