Australian Banks Give Boot to Bitcoin Companies (Sept. 24, 2015)
Australia’s major banks reportedly are closing the accounts of more than a dozen of the country’s digital currency providers, claiming AML concerns. Australian financial institutions sent letters to 17 bitcoin companies informing them their accounts would be closed, according to Reuters, which cited a spokesperson from the Australian Digital Commerce Association. The banks included Westpac Banking Corp., Commonwealth Bank of Australia, National Australia Bank and Australia and New Zealand Banking Group.
But many in Australia’s digital currency community—along with at least one lawmaker—suspect the banks’ decisions to close the accounts could be motivated by fears of competition, rather than compliance concerns. Several companies whose accounts were closed reportedly said the banks refused to explain the decision or discuss what could be done to remedy the situation. Meanwhile, Matthew Canavan, a senator from Queensland, has called on the Australian Competition and Consumer Commission (ACCC)—the country’s competition watchdog—to intervene. “The actions by the banks would appear to directly engage competition in the financial services industry as it stands now—and, by effectively nipping in the bud the growth of potential competitors, is likely to substantially reduce the potential for future competition to the detriment of consumers in the future,” Canavan wrote in a letter to the ACCC this week.
The banks shutting down the accounts all have digital currency initiatives of their own in the works, including Commonwealth Bank’s involvement in testing the Ripple protocol for money transfer and Westpac’s June investment in bitcoin exchange Coinbase. And a Parliamentary committee—which included Canavan—last month recommended a simplified regulatory framework for digital currency companies and lowering tax rates on digital currency holdings, providing an incentive for digital currency startups to remain in the country. The panel’s report identified digital currency as having the potential to provide more competition in the financial services industry, thereby increasing consumer choice and lowering costs.
The situation is somewhat reminiscent of the U.K. banking industry’s withdrawal of services to many e-money issuers in 2013, citing AML compliance risks. Some industry observers at the time accused the banks of simply trying to snuff out competition by keeping new entrants from entering the market.