Too risky – Australian banks close down bitcoin companies

Written by on September 22, 2015 in News with 0 Comments
A Bitcoin logo is displayed at the Bitcoin Center New York City in New York's financial district July 28, 2015. REUTERS/Brendan McDermid

A Bitcoin logo is displayed at the Bitcoin Center New York City in New York’s financial district July 28, 2015. REUTERS/Brendan McDermid

SYDNEY (Reuters) – Australia’s major banks are closing accounts of bitcoin companies, forcing at least 13 digital currency providers out of business in response to tougher rules on money laundering and terrorism finance, an industry body spokesman said on Tuesday.

The move comes just months after Westpac Banking Corp became the last of Australia’s four major banks to pull out of the remittances business in order to reduce compliance risks.

Banks globally are exiting sectors that present compliance headaches under pressure from regulators to meet tighter anti-money laundering and counter-terrorism financing rules.

“The current bitcoin operating model requires very tough compliance and assurance requirements to ensure we meet the high standards required under anti-money laundering regulations,” a Westpac spokesman said.

“We continue to monitor developments in bitcoin, including their regulation.”

Banks have sent letters to 17 bitcoin companies including BitTrade and Buyabitcoin informing them their accounts would be closed, an Australian Digital Currency Commerce Association (ADCCA) spokesman said.

“We continue to speak with banks to find a solution to the problem. ADCCA looks forward to guidance from the government as to how the situation can be resolved,” he said.

Seven percent of the world’s $5 billion worth of bitcoin is in circulation in Australia, according to ADCCA estimates.

Commonwealth Bank of Australia declined to comment while National Australia Bank and Australia and New Zealand Banking Group did not immediately respond.

An Australian government inquiry last month said that while digital currencies should be more tightly regulated, they also should be treated as money and taxes should be simplified for people who trade with them.

Westpac in June invested an undisclosed amount in U.S. bitcoin start-up Coinbase, in the first such deal by an Australian bank in the largely unregulated virtual currency.

(Reporting by Swati Pandey; Editing by Stephen Coates)

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