There are increasingly publicized challenges posed to the Australian cryptocurrency industry by the country’s ‘big four’ banks’ refusal to provide financial services to crypto companies. Many analysts are speculating that the issue will become the catalyst for the development of detailed regulations for the virtual currency era, arguing that the opaque nature of the current legislative apparatus pertaining to cryptocurrencies is to blame for Australia’s bitcoin banking embargo.
Many Australian Cryptocurrency Brokers Have Recently Suspended Their Services, Blaming Local Banks for Refusing to Provide Financial Services to the Industry
Last month, Coinspot became the most high profile Australian crypto brokerage to suspend its services, criticizing the nation’s banks for the being “unwilling to work” with the cryptocurrency industry. The company claims to have persistently experienced “frequent account closures” and the imposition of “strict limits” on their bank accounts.
Said complaints have been echoed by a myriad of Localbitcoins vendors, with Coindance data indicating that P2P trade via the platform more than halved for the week of the 30th of December when compared with the preceding week.
Australia’s Leading Banks Have Sought to Dismiss Accusations of a Banking Embargo Targeting Bitcoin Businesses
In response to enquiries regarding the policies of the big four banks with regard to the cryptocurrency industry, Australia’s banks have largely downplayed and avoided the issue.
A representative of the Commonwealth Bank of Australia is reported to have stated that its customers “can interact with these currencies as long as they comply with our terms and conditions and all relevant legal obligations.” The spokesperson added that “Commonwealth Bank is receptive to innovation in alternative currencies and payment systems, however, we do not currently use or recommend any existing virtual currencies as we do not believe they have yet met a minimum standard of regulation, reliability, and reputation compared to other currencies that we offer to our customers.”
A representative of National Australia Bank (NAB) similarly stated that the bank “does not have a policy to deny customers the right to purchase bitcoin,” whilst a spokesman from Australia and New Zealand Banking Group (ANZ) stated that it “does not prohibit customers buying digital currencies.” A spokeswoman for Westpac stated “Westpac has controls in place to actively verify the identity of our customers and monitor the activities of those customers. Where we cannot verify the origin of transfers, we may act to ensure we comply with Australia’s anti-money laundering obligations.”
Industry Representatives Weigh In
Adam Poulton, president of the Blockchain Australia Association, recently discussed the hurdles facing Australia’s cryptocurrency industry with local media, arguing that the recent dramatic influx of new crypto investors has likely contributed the banks’ hesitation to work with virtual currency businesses.
“The volumes have grown so quickly…It’s raised a lot of red flags with the banks. They’re just seeing hundreds of thousands of dollars per day, and they’re like ‘What’s going on here? It looks like fraudulent activity, so we’ll just suspend things for a little while’.”
Adrian Lee of the University of Technology Sydney has also weighed in on the issue, stating “There’s this murky issue of you buying something that doesn’t have any regulatory backing, and can be transferred off to do something else.”
Do you think the industry needs greater regulatory clarity to help Australian institutions partner with cryptocurrency businesses? Share your thoughts in the comments section below!