Elevated bank regulation prompts Swan Bitcoin to warn users of account termination.

California-based Bitcoin services platform Swan Bitcoin has warned that individuals who engage with BTC mixing services on the platform may have their accounts terminated due to heightened scrutiny from banks and custodians.

Some of its banking and security partners have been freezing or terminating accounts involved in bitcoin mixing, the statement said, stressing that depositing funds “directly into” or withdrawing funds “directly” from crypto-mingling services may interrupt user service. Account by Swan Bank & Security Partners.

Swan Bitcoin responds to regulatory pressure

Citing regulatory obligations, Swan Bitcoin's Chief Technology Officer (CTO) Ian Pritzker explained that the platform's clients will interact with qualified custodians and banks to facilitate the BTC onramp. Swan is currently partnering with two qualified tutors, with a third expected to join this quarter and a fourth expected to start in 2024.

These custodians establish personal relationships with multiple banking institutions to provide fiat services. However, Pritzker noted that the pool of banking institutions willing to provide services to companies in the crypto space is limited and shrinking.

While Pritzker is an advocate of privacy and even encourages the use of hybrids, he admits that the current political climate has created fear in the banking sector, which has led many banks to completely reject any relationship related to “crypto”.

He also pointed out that banks are strengthening Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements as a measure to keep up with this evolving business landscape.

Further investigation on Bitcoin

Pritzker pointed to “grossly exaggerated” news reports on Hamas' crypto-funded funding. The CTO added that Bitcoin is an easy scapegoat for the system's failures because it is still “not well understood” by Washington and the media.

It's worth noting that the Swan Bitcoin exec isn't the only one who drew attention to the Wall Street Journal's false report that Hamas and affiliated terror groups received tens of millions of dollars in cryptocurrency. Last month, stable coin issuer Tether also set a record for mainstream media bias.

Shortly thereafter, US Deputy Treasury Secretary Wally Adeyemo clarified that crypto is not primarily responsible for terrorist financing. Even expert testimony says funding will come from traditional fiat channels. Despite this, “several members of Congress have used this opportunity to push for greater visibility of Bitcoin.