Kraken puts hold on USD transactions

Cryptocoin exchange Kraken announced today that it was putting a temporary halt on transactions in the U.S. dollar, and offering a 2% bonus to users who switch their existing balances to euros. Speaking with CoinDesk, a Kraken customer support representative explained the decision as the result of slow and delayed USD withdrawals.

According to Kraken’s announcement, the decision is effective immediately.

“All pending USD withdrawals not already in transit are being cancelled and the funds will be automatically credited back to your account.”

Launched in September of last year, the San Fransisco-based exchange has had problems with U.S. currency almost from day one. The company had its account with Bank of America frozen in November, only to see it reinstated weeks later. Kraken is partnered with German internet-based bank Fidor Bank AG, which has limited holdings in USD.

According to Kraken CEO Jesse Powell, the decision to halt transactions in USD was a pragmatic one, as the exchange only handles a small amount of dollar-based business. Speaking with Coindesk, Powell said:

“We’re still doing dollar withdrawals and dollar trading; we just don’t want to take any more new dollars,” [Powell] said. “They can still withdraw, they can still trade with dollars. We just didn’t want to create any new liabilities.”

Powell also noted that most of Kraken’s customers who trade in USD are not US residents.