August 30, 2013 - Bitcoin exchange Tradehill has temporarily shut down trading, citing "banking and regulatory" issues related to its credit union partner. In a statement on its Web site, the firm says the "decision has not been made lightly and we regret having to take such action".

In a separate message, sent out to users and posted on Reddit, Tradehill blames the regulatory woes of its partner, Internet Archive Federal Credit Union (IAFCU). News of a partnership between Tradehill and IAFCU only broke last week when Bloomberg reported that customer accounts were being moved to the credit union.

The deal was supposed to offer security in the fast-changing regulatory environment, letting users hold their balance in a federally insured account in their own name. However, in its latest e-mail to users, Tradehill says it is "no longer able to continue" its relationship with the credit union. Anyone with an account post-integration can withdraw their funds.

In a message on its site, IAFCU says: "Our credit union has worked within the evolving regulatory environment, which has not always been easy. This is a long not a short road and sometimes with detours. Until we have further clarity, we are unable to service some of our corporate members."

For its part, Tradehill says that it registered with FinCEN in August and is "actively engaging with banks and regulators to continue development of future business products and practices".

With the digital currency currently under intense scrutiny, Bitcoin Foundation representatives met with a host of US law enforcement agencies and regulators in Washington earlier this week to discuss oversight and cooperation.