Much like their counterparts in Europe and North America, banks in Australia have had mixed reactions to bitcoin.
While some financial institutions are working together with bitcoin businesses to understand the issues at hand, others have given conflicting messages, and at least one is ridding itself of bitcoin customers altogether.
Banks’ willingness to work with entrepreneurs in the bitcoin world is vital to building a healthy and stable bitcoin ecosystem.
Exchanges, ATMs, payment processors and even some face-to-face traders all need to move vast amounts of money through traditional financial networks, as they bridge the present gap between the fiat and cryptocurrency systems.
Banking reactions to bitcoin around the world have so far fallen into one of these categories:
1) Curiosity and a willingness to learn more.
3) Suspicion of criminal activity and/or a threat to the banking industry’s business model.
There may also be opposing views within the banks, just as there are differing views on the banking industry among those involved with bitcoin.
Australia’s banking industry is dominated by the ‘Big Four’ banking groups: the Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), the Australia and New Zealand Banking Group (ANZ), and Westpac.
While there are other smaller players, anyone engaging in commerce in Australia is bound to encounter one of the Big Four at some stage.
Commonwealth Bank: avoiding bitcoin
Melbourne-based exchange CoinJar, which recently secured half a million US dollars in venture funding, was the highest-profile Australian company to feel their bank’s wrath so far. Back in August, the Commonwealth Bank froze transactions to and from CoinJar’s account.
In an additional move that sent chills through the entrepreneurial community, the bank also closed down the personal accounts of co-founders Asher Tan and Ryan Zhou without notification.
Though CoinJar has rebounded and gathered strength since, both actions by the bank harmed its daily operations as it tried to transact in dollars with customers, dealt with confusing explanations from the bank, and sought to defend its own reputation.
Customer Ian MacKay said he had used his CBA account to transfer to Bitstamp without issue in June 2013, but received a text message in November to contact the bank after attempting to send AU$10,000. He said:
“I was informed that they had blocked all transfers for all customers to that payment address. They promptly reversed it without charge.”
“When questioned they stated they were ‘not allowed’ to say anything more than that. I expressed polite dismay that CBA should choose the path of censorship when Bitstamp is clearly 100% above board and, as far as I know, Australia has basically said they will treat BTC like cash.”
MacKay then convinced the customer service representative to look into bitcoin for himself on “non-bank time.”
National Australia Bank: bitcoin friendly
In a twist of fate, a representative from another ‘Big Four’ bank, the National Australia Bank, approached Tan at a startup event and offered to help out.
CoinJar has spoken highly of NAB’s attitude to bitcoin and startup businesses in general, and have publicly recommended them to other entrepreneurs.
ANZ Bank: Mixed
But what of the other two major banks? ANZ appears mixed on the issue, with some customers receiving account closure notices and others (so far) receiving assistance combating fraud.
Chris Cameron, a doctor who trades on LocalBitcoins in his spare time, claims the ANZ bank is moving to close down his account and others. Chatting to fellow traders on LocalBitcoins, he discovered others have received notices advising them their accounts will be closed in January 2014.
Having previously had his Commonwealth Bank account closed around the same time as CoinJar’s, Cameron was dismayed at ANZ’s decision to follow suit:
“This is despite having an amazing credit rating and I am actually classified as a premium client of theirs,” he said.
“Therefore it seems that NAB is the only bank left in Australia with a favorable approach to bitcoins. Just thought I would let you know… now it seems that ANZ has also joined the anti-BTC.”
Another LocalBitcoins trader, Trent Churchill, told a different story. He had heard of three other ANZ customers involved with trading whose bank accounts had been compromised. This was “most likely due to poor security on the customers’ part,” and involved the theft of LocalBitcoins-related details.
Following this, Churchill personally experienced a number of attempts at fraudulent transactions by a user armed with the same previously-safe account details.
After one transaction had not cleared over a weekend, he contacted ANZ and was told a bank representative had been trying to get in touch with him. Upon reaching the appropriate department, he had the following exchange:
“‘So you trade bitcoins, do you?’ she asked. ‘Yes’ I replied. ‘Well I’m here to make that safer and more efficient’ she said. ‘We have many bitcoin-trading customers and some of them are very notable clients. We wish to work with them and help them trade safely.’ She then proceeded to tell me she was the lead fraud investigator of the ANZ Falcon Fraud Prevention Team and that I was not in any trouble. ‘In fact I’m now your personal fraud prevention officer,’ she said, and gave me details on how to contact her directly during business hours, and the fraud team after hours.”
“I was amazed at this bank’s attitude and helpful nature towards bitcoin,” Churchill added. “Very refreshing. I was able to point out that the local bitcoins account [in question] also had an ad for selling bitcoins for cash, and a street address had been left on the ad. I hope they nailed him.”
Joshua Ballard, who operates the online store Bit-Cash, spoke highly of ANZ, claiming the bank had actively helped him identify fraud.
“They are amazing in regards to my business. I have regular help and support with them, and a good dialogue with their fraud division who actively help me spot fraud in the making (when someone pays me with a hacked bank account for bitcoin). They have even spotted my losses a few times when the fraud has snuck through. Their main goal is to help me with my business, it seems.”
“ANZ has not officially stated anything about bitcoin, but by their actions and supportive frameworks i think that they are not anti-bitcoin, as they know well what I am doing. They are even happy about me starting with Litecoin.”
There are fewer reports about the other ‘Big-Four’ bank, Westpac. Trent Churchill claimed he made a personal visit to a branch to talk with a manager about bank policy on digital currencies, but the manager seemed confused and had never heard anything about “Bit-o-coin.”
Building a Bitcoin Payment Infrastructure in Australia
Stephen Rowlison is the CTO of Diamond Circle Pty Ltd, which is attempting to introduce a bitcoin ATM and point-of-sale payment network featuring bitcoin transfer via near-field communication (NFC) tags to Australia.
Given bitcoin’s high value of late, Diamond Circle also wants to incorporate credit/debit card payment options into its machines, but Rowlison admits it has presented a “significant challenge” so far.
Building these extra functions into the ATMs has also brought the company into contact with the Australian Payments Clearing Association (APCA), a self-regulatory body which counts all major financial institutions among its members.
APCA has said little about bitcoin but mentions under ‘Future of Payments‘ on its website: “New digital currencies, such as Bitcoin, may […] reshape the payments landscape.”
While he has heard several other tales of Australian account shutdowns, Rowlison says he’s more concerned with the big players in the credit card industry.
“My issue presently is whether Visa and Mastercard will approve us to issue bitcoins from our ATM and merchant point-of-sale equipment. This is going to be a global decision.”
Failing these companies’ approval, bitcoin ATM users will find themselves feeding large quantities of paper (or in Australia’s case, polymer plastic) banknotes into the machine to get their bitcoins.
As long as some of their banks don’t find out what disruptive things they’re doing with that cash, it seems.
CoinDesk contacted a Commonwealth Bank spokesperson and ANZ Media Relations for comments, but had not received any responses at the time of writing.
Australian Dollar Image via Shutterstock