Money laundering
Banks mostly avoid providing Bitcoin services in first world countries because they are wary of violating anti-money-laundering regulations.
Moving large sums of money around has traditionally been a complicated process that involved trusting intermediaries to do the transfer like the Swiss Banking System. Switzerland has a tradition of banking secrecy that dates back to the Middle Ages. This system was codified in the Banking Law of 1934. Up until recently, this made Switzerland the prime hub of individuals looking to evade taxes. But in 2008, this all changed thanks to a multi-billion dollar tax evasion case probed by the Federal Bureau of Investigation (FBI) which involved the Swiss bank UBS. The incident led to stricter money laundering laws for the Swiss banking industry along with more authority to regulators.
So tax evaders are now looking at alternative ways of laundering money like cryptocurrencies. For individuals trying to evade taxes or launder money, Bitcoins provide enormous advantages over the Swiss Banking System. With Bitcoins, individuals do not have to rely on other intermediaries to facilitate the transfer. Cryptocurrencies like Bitcoin and Monero which are focused on privacy allow individuals to become their own banks by holding their own private keys. Since cryptocurrencies make it hard to regulate such transfers, they could attract lots of people who want to evade taxes in their respective countries. However, some startups like Chainalysis are actively trying to come up with solutions to track Bitcoin transactions as they are available for everyone to view on its public ledger.
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