While Bitcoin companies in Australia have been coming under increasing pressure from the country’s banking sector, bitcoin exchange volume has been chugging along seeing healthy growth amidst an “unregulated environment.”
Bitcoin remains unregulated in Australia
These last few years, the Bitcoin industry in Australia has seen an immense growth that has created a competitive landscape for exchange operators and bitcoin startups in the country. But lately, Australian banks have been closing all financial support and freezing the bank accounts of many Australian cryptocurrency-based companies.
The largest Australian banks have been pursuing bitcoin companies without any motivation; they have been terminating banking support for companies doing business related to the digital currency, arguing that bitcoin is a vehicle that facilitates money laundering and other illegal activities.
“The Reserve Bank of Australia has indicated that it has no intention of regulating Bitcoin at current. Citing ‘any benefits of regulation would outweigh the potential costs.’ The ATO does not consider Bitcoin as money nor a foreign currency. Bitcoin has failed to be recognized as a financial product; bitcoin remains unregulated in Australia.”
“There is no official regulatory body in Australia which will deal with Bitcoin, if you call up AUSTRAC or ACORN saying you think you have ‘red flagged’ a transaction as a potential scamming operation running out of Nigeria, they tell you it’s not their concern, Bitcoin is outside of their jurisdiction,” he continues.
The Australian Competition and Consumer Commission (ACCC) and Senator Matthew Canavan saw the Banks action as an unlawful act and launched a full investigation to understand the reason for this decision. This has caused the Digital Currency industry in Australia to band together, forming an alliance under the ADCCA (Australian Digital Currency Commerce Association) for the purpose of self-regulation and compliance.
The ADCCA has been struggling to get some explanation from the banks and a clear justification for their decision. Hackett says that “Banks are forced to play the role of de facto regulators for the Bitcoin industry.” This in turn, makes it commercially unprofitable for Banks to deal with bitcoin companies. “It simply costs more for banks to ensure Bitcoin companies meet their in-house AML/KYC requirements than they earn from their business. Without official regulation, Banking relationships are antisocial and often short-lived,” Hackett adds.
The Banks unfriendliness has been forcing many Australian bitcoin businesses to turn their backs on the digital currency. Hackett stresses that:
“the Digital Currency industry is left in a conundrum, as the Central Bank of Australia (RBA) does not view our industry as warranting regulation, whilst commercial Banks do not want our business unless we are regulated.”
In 2013, The National Australia Bank published an exploratory and neutral report in which it questioned if Bitcoin could replace the AUD. Then in 2014 the Australian Tax Office (ATO) released its tax rules on bitcoin forcing exchange transactions to be subject to Tax. The taxation applied was the same as taxation laws for goods and services, equating to 10% on the purchase of Bitcoin.
Even though some European and U.S. Banks refuse to keep bitcoin-affiliated accounts, these latest developments in Australia seem to be a coordinated shutdown of bitcoin exchanges by the country’s banking system.
Bitcoin exchanges in Australia
The rising unfriendliness towards bitcoin in the country has created a few blockades for bitcoin exchanges, forcing many of them to shut down abruptly. This has inevitably made it harder for bitcoin enthusiasts to trade their coins in the country.
List of exchanges, compliments of bitcoinx.io:
BTC Markets – The Bank of Queensland has allowed the exchange to remain open.
Independent Reserve – The exchange has been able to remain open.
BuyaBitcoin – This brokerage has managed to work around the difficulties imposed by the Banks and has been able to remain open without any issue. It is currently one of the most trusted exchanges in the country.
CryptoCoin Australia – Closed its doors due to lack of banking support.
DWV Exchange – Shut down last September because it couldn’t hold partnerships.
SpendBitcoins – SpendBitcoins halted their services and sold their platform to a third-party.
igot – The exchange is still open but having a lot of issues.
Coinjar – Coinjar left Australia and now operates in the U.K.
Coin Loft – The exchange has been able to remain open for business.
CoinTree – the exchange is still open for business in Australia.
Bit Trade Australia – has also been able to remain open in Australia.
LocalBitcoins – The exchange is still running, and it is a real example of how banks are not capable of impacting Bitcoin’s decentralized nature. Below is the volume chart for the P2P exchange in Australia, clearly showing healthy growth:
Despite the pressure from banks, several exchanges have managed to remain open. Even though there have been serious setbacks to the digital currency industry in the country, plenty of bitcoin transactions seem to show otherwise and tell a story of a thriving market.
[Editor’s note: the article has been updated to include a link to bitcoinx.io as an additional source]
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