Bitcoin in Trouble in Australia: Banks Resist It

NetEase Technology News    According to Reuters, Bitcoin is in trouble in Australia due to a boycott by the Australian banking industry, with more and more companies no longer supporting the virtual currency.

Many businesses in Australia have stopped accepting bitcoin due to concerns that it could be linked to criminal activity, a trend that intensified last month when Australian banks took action to shut down the accounts of 13 of the country's 17 bitcoin exchanges.

This is undoubtedly a major blow to Bitcoin supporters. They had hoped that the virtual currency could play an important role in daily business transactions in developed economies, and Australia was once seen as one of the most promising markets. It is estimated that the total value of Bitcoin in the world is currently $ 3.5 billion, and Australia holds 7 % of it , which is a considerable proportion for a country with a population of only 24 million.

"For us, the cleanliness of our reputation was more important than accepting Bitcoin," said James Snodgrass, managing director of Sydney real estate agency Forsyth Real Estate , which ditched Bitcoin in late 2014 after an investigation by federal tax authorities .

Last year, Forsyth announced that it would accept Bitcoin as payment for home purchase deposits and other agency fees to cater to international buyers. Although the tax authorities' investigation did not find any wrongdoing by Forsyth , the company was still plagued by negative publicity. Therefore, Forsyth announced that it would stop accepting Bitcoin payments without having accepted a single Bitcoin payment .

Although most mainstream banks in Europe and the United States have refused to set up Bitcoin-related accounts, it is the first time that a country's banking system has coordinated to close Bitcoin accounts, as in Australia.

The move makes it more difficult to convert regular currencies into Bitcoin and vice versa, potentially threatening the long-term value of Bitcoin.

Adrian Lee , a senior finance lecturer at the University of Technology Sydney, noted: “Bitcoin is valuable because people are using it; if no one is using it, it becomes worthless.”

Close Account

In August this year , the Australian government issued an investigation report recommending the abolition of sales tax for Bitcoin buyers. The move by Australian banks to close Bitcoin accounts seems to contradict this recommendation. Australia's anti-money laundering agency AUSTRAC told reporters that Australian banks have no legal obligation to close Bitcoin accounts.

Australia's "big four" commercial banks - Commonwealth Bank of Australia , Westpac Banking Corp , Australia and New Zealand Banking Group and National Australia Bank - have led the Australian Bankers Association's action on bitcoin.

Tony Pearson , acting chief executive of the Australian Bankers Association, would not confirm whether the country's banking industry is coordinating a boycott of Bitcoin. But he said in an email that Bitcoin "lacks transparency and government regulation, poses numerous risks to users, the integrity of the payment system, the financial system, and erodes the tax base."

Australia's organised crime agencies have said they are concerned that bitcoin's untraceability makes it attractive for money laundering and illegal drug sales.

In the UK and the US, most large banks have cut ties with Bitcoin account holders, but due to a lack of industry coordination, some banks still support the virtual currency, such as Germany's Fidor Bank and Silicon Valley Bank, a US commercial bank focused on the high-tech sector .

Faced with three choices

Of the 17 bitcoin exchanges in Australia, 13 have ceased operations after their bank accounts were closed.

The remaining four bitcoin exchanges have also had their accounts frozen. They now face three options: close down, move their operations overseas, or spread their accounts into several smaller bank accounts to avoid being discovered by banks.

Buyabitcoin.com.au , one of the four exchanges, said it was still considering its next options.

"Obviously this makes it very difficult for us to receive payments from our customers, but we still maintain accounts with several banks," said Andrew Smith, general manager of the Melbourne-based bitcoin exchange.

Smith declined to say which bank accounts his company currently uses for fear that those accounts would also be compromised, but said he was planning to move his business to another country.

Australia's regional bank, Bank of Queensland, still maintains some bitcoin accounts, two sources said. The bank said in an emailed response that "virtual currencies are outside the scope of our risk appetite" but did not deny or confirm the existence of the accounts.

Retail business exit

Some industry observers believe that user vacillation may be bitcoin’s biggest problem.

At least six Australian retailers interviewed said they were considering exiting Bitcoin, despite publicly announcing they were accepting Bitcoin payments as late as 2014 .

“If governments start attacking the whole idea of ​​virtual currency and giving it a bad name, that could have a negative impact on brands like ours that have embraced it,” said David Brim, co-founder of Australian off -road vehicle maker Tomcar . In December 2014 , Tomcar sold a car using Bitcoin, the first time in the history of Bitcoin.

Grant Fairweather , owner of the Metropolitan Hotel in Sydney, said he began accepting Bitcoin after a group of digital currency supporters used his pub as a regular meeting place.

“They told me it was doing pretty well, but it didn’t show up in my case,” Fairweather said. At those meetings, Fairweather sold about $ 70 worth of drinks using Bitcoin but didn’t conduct any other transactions.

An online clothing retailer told Reuters that she has not conducted any transactions since she began accepting bitcoin payments in 2013. She asked not to be named, saying: "Anyway, bitcoin is out, and it's better not to associate our names with it." (Liu Chun)