Dwolla puts the breaks on its Bitcoin-related services

An email sent by Dwolla to BitBox and other of its merchant customers informs of plans to withdraw its services

An email sent by Dwolla to BitBox and other of its merchant customers informs of plans to withdraw its services relating to bitcoin or other virtual currencies.

The email suggests that regulatory concerns have motivated Dwolla’s decision: “Recent interest involving virtual currency and its exchanges has created uncertainty and confusion around virtual currency.”

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Having provided merchants with bitcoin accepting payment services, enabling the exchange of the virtual currency to fiat currency, Dwolla says that it can no longer support the 0.1% merchant base that require such services.

Dwolla has had some challenges linked to its bitcoin business including: having been served with a court order by the US Department of Homeland Security, which seized an MT Gox account of $2.9 million, and last year, TradeHill filed a law suit against Dwolla with the claim that it had removed more than $100,000 dollars from its account without notification.

This is not good news for Dwolla customers who have chosen to take a leap into the bitcoin world by making bitcoin payments possible for consumers. It also talks to a period of change and adjustment for bitcoin. The shut-down of Silk Road a few weeks ago was a victory in the fight against money laundering. It may even have been a victory for bitcoin whose darker side has been unveiled and removed; making space for the great the legitimate opportunities that bitcoin has to offer. The outcome remains to be seen but bringing bitcoin into the mainstream appears not to be an easy transition, as is evident in Dwolla’s departure set for the 28th of October at 16:00 CT.

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