The relationship between Australian banks and Bitcoin companies is one of the most uneasy ones in the world today. Over the past few years, Australian Bitcoin users have faced a lot of scrutiny. Even though taxation of Bitcoin income gives digital currency a more legitimate appeal, the decision was met with a lukewarm reception. Now that some Australian banks have decided to close accounts of Bitcoin startups, things have gone from bad to worse.
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Banks Are Afraid of Bitcoin and Its Implications
In recent months, no less than 17 different Bitcoin startups have received a letter from their respective bank that informs them about the impending termination of their bank account. It was only a matter of time until banks took a more aggressive approach to Bitcoin companies. And that decision has not gone by unnoticed.
Bitcoin brings a lot of potential for innovation to any country in the world. Australia has built up a reputation for being open-minded to new technologies over the years yet, for some reason, Bitcoin is not popular among government officials. Or to be more precise, the banking industry in Australia is turning quite hostile where Bitcoin is concerned.
It is no secret that Bitcoin can easily compete with the traditional financial infrastructure and even overtake it in the long run. Major banks do not like competition that tries to disrupt their stranglehold on people’s finances and will stop at nothing to oppose this threat. However, shutting down bank accounts of Bitcoin startups is taking things one step too far.
What makes this story even more interesting is how there are Australian laws against anti-competitive behavior, which apply specifically to companies holding a large market share. In the financial world, there is no other major competitor than other banks and you can rest assured backroom deals are in place to not bother each other in any major way.
Banks have been warned not to misuse their position in the financial world and it remains unclear as to whether or not these allegations are a result of power abuse. Even though digital currencies such as Bitcoin are a major threat to traditional banking, there could be other reasons at play here as well. In fact, it remains unclear as to which banks are responsible for closing Bitcoin startups’ accounts.
These allegations come at a strange time, as various Australian banks had openly shown their interest in blockchain technology, and Bitcoin as well. However, saying something in the press and doing the same thing in a real-life situation are two different things. Luckily for all parties involved, these matters will be investigated further by the Australian Competition and Consumer Commission (ACCC).
ACCC Investigates Allegations
All Australian banks have been asked to declare their intentions in terms of Bitcoin and blockchain companies, moving forward. Furthermore, the ACCC investigation will uncover whether or not there were any deals between banks regarding Bitcoin startups, prior to these allegations. Early indicators tell us a report on this investigation will not be released until a few months have passed.
One thing to keep in mind is how Bitcoin does pose a threat the KYC & AML regulations enforced by banks and other traditional financial institutions. It remains unclear as to whether or not this potential risk played a part in the decision by various banks to take action against Bitcoin companies. Last but not least, it is possible the Bitcoin companies in question did not properly comply with the AML/CTF concerns.
Images courtesy of Shutterstock, ACCC, Lambda Solutions