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Australian Banks Close Accounts of Bitcoin Companies

Reading Time: 2 minutes by on October 2, 2015 Business, Finance, News
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Australia’s largest banks have closed the accounts of 13 bitcoin companies and have sent letters to four others, informing them that their accounts will be closed soon without any further explanation.

Ironically, the letters were sent by Westpac Banking Corporation and Commonwealth Bank of Australia, two of the four banks in the country that have partnered with Ripple Labs to incorporate the blockchain technology onto their traditional banking systems. The Commonwealth of Australia specifically has been working with Ripple Labs to settle international payments quickly, using blockchain technology.

Westpac Banking Corporation has already shut down the bank accounts of Bit Trade, an Australian bitcoin exchange founded and operated by the Australian Digital Currency Commerce Association Chairman Ron Tucker.

According to Financial Review, Tucker announced that all large Australian Banks will be closing the accounts of local bitcoin companies, restricting the potential growth of emerging bitcoin startups.

“Our members have been unable to obtain any formal clarification on the reasons for closure, except for references to policy or risk. Just what policies or risks these are have not been specified. The industry is more than happy to talk to the banks about their concerns. However, neither the association nor its members have been given the opportunity,” said Tucker.

Financial Disruption

In August, the Australian Senate committee announced that bitcoin and other cryptocurrencies were to be recognized as a regular currency for Goods and Services Tax, overturning the decision of the Australian Taxation Office which defined bitcoin as an intangible asset.

The inquiry of the Australian senate was supported by the Reserve Bank of Australia and Westpac Banking Corporation, two of the many banks that have stopped supporting bitcoin companies abruptly.

The Financial Review reported that the Senate “received 48 submissions and heard evidence from organizations including the Reserve Bank of Australia, Westpac Banking Corporation, The Australian Bankers’ Association, The Australian Federal Police, The Australian Crime Commission and the ATO at three public hearings.”

However, Tucker hypothesized that the banks have decided to terminate their support and services for bitcoin companies due to the fear of future rivalry.

“It is widely recognised that the banking sector could stand to be disrupted, as indicated in comments from Westpac’s CEO two weeks ago. Companies in this industry are in the business of offering and developing cost-effective financial services for consumers and businesses,” Tucker explained. “However, should bitcoin companies be shut out of the Australian marketplace because of de-banking actions, this question will forever remain a hypothetical.”

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