Banks ‘banning bitcoin accounts’
AUSTRALIAN cryptocurrency exchange Coinspot has described warnings of liquidity issues due to too many customers cashing out as "absolute rubbish and untrue".
"The temporary restriction on AUD deposits will remain in effect until at least the first week of the new year," the company wrote on Facebook. "AUD withdrawals, coin deposits, buy/sell orders and trading on the platform will continue to operate as normal.
"We assure you we are just as unhappy with the situation as you but unfortunately Australian banks have been so far unwilling to work with the digital currency industry which leads to frequent account closures and strict limits on accounts whilst they remain operational, in effect debanking our industry."
So @NAB @CommBank @WestpacNZ and @ANZ_AU are all freezing customer accounts and transfers to @BTCMarkets @coinspotau @GetCoinJar @coinbase . #Banks can fight it, but people want control of their money #ausbiz #auspol— Nugget's News Australia (@nugget_alex) December 28, 2017
This is a letter I received a few weeks ago. Also included was a T&C's booklet. I've highlighted the clause they are referring to.— Bitcoin Babe (@BitcoinBabeAU) December 29, 2017
I have a PTY/LTD company, paying tax, registered with the OAIC and conduct all relevant KYC/AML/CTF checks. pic.twitter.com/DShAZPIjyi
Banned from 30 different Australian banks and counting.— Bitcoin Babe (@BitcoinBabeAU) December 28, 2017
While the big four deny any blanket policy banning cryptocurrency purchases, a number of customers have reported accounts being closed. CommBank's terms of service for its business banking account is the only one to specifically mention bitcoin.
"We can refuse an application for an international money transfer if we believe that processing it would offend against any policy or law relating to money laundering, sanctions, or the national interests or security of any state," it said.
"We can also refuse to process an IMT, because the destination account previously has been connected to a fraud or an attempted fraudulent transaction or is an account used to facilitate payments to bitcoins or similar virtual currency payment services."
A CommBank spokesman said customers "can interact with these currencies as long as they comply with our terms and conditions and all relevant legal obligations".
"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," he said.
Michaela Juric, who calls herself Bitcoin Babe, wrote on Twitter that she had been "banned from 30 different Australian banks and counting", posting a recent letter from ANZ with the highlighted clause she is alleged to have violated.
"ANZ may exercise its discretion to close an account due to unsatisfactory conduct or for any other reason it considers appropriate," the letter read.
However, an ANZ spokesman said the bank "does not prohibit customers buying digital currencies", while a NAB spokeswoman also said it "does not have a policy to deny customers the right to purchase bitcoin".
A Westpac spokesperson said: "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."
Earlier this week, Coinspot responded to an image circulating on Facebook which warned that a lot of people were cashing out via Coinspot, but "very few are buying and now with them limiting depositing, they're going to have a very risky liquidity issue".
"To summarise the above screenshot, all absolute rubbish and untrue," Coinspot wrote. "Hope you had a good New Year."
On Wednesday, Coinspot founder Russell Wilson said the site was "getting closer to turning AUD deposits back on".
"We have seen usual trading activity on the exchange for the last couple of weeks and even though the AUD restriction has been in place we have seen no higher than usual withdrawals," he said.
"We always hold 100 per cent of our customer assets and the assets are always held in the corresponding asset. Ensuring the assets are always held correctly was a factor in the decision to temporarily stop new AUD deposits. The exchange would be able to cope with a large volume of withdrawals without any significant issues."
Mr Wilson said the recent bank issue "would have potentially impacted our ability to execute trades on the international markets by impeding our forex capability".
"We chose to temporarily disable AUD deposits while we work on establishing a stable banking relationship to ensure we can continue to always deliver on our promise to hold assets one for one," he said.
Bitcoin and other cryptocurrencies skyrocketed in value last year, with a sudden investor frenzy dominating headlines and often overloading cryptocurrency exchanges, which are still largely unregulated.
David Gerard, author of Attack of the 50 Foot Blockchain, has warned that the price of bitcoin is "largely fictional", describing the inside of the exchanges as "the Wild West" and pointing out how anti-money laundering laws make cashing out difficult.
"The Know Your Customer anti-money laundering (KYC/AML) regulations are an endless source of woe for the bitcoin trader," Gerard writes.
"The idea was to catch money laundering by terrorists and criminals. The tricky part for you, the customer, is that it requires your bank to treat you as the threat. And bitcoin is notoriously a favourite of criminals and drug dealers, so it gets special attention from bank compliance officers. This applies to bitcoin exchanges as well as banks."