Marred by concerns about illegal uses, Australian businesses are saying no to bitcoin en masse — spurred along by a move by Aussie banks last month to close the accounts of 13 of 17 bitcoin exchanges nationally.
Up until now, Australia had been one of bitcoin’s more promising avenues for eventual mainstream commerce uses. Seven percent of the currency’s estimated $3.5 billion total value is held in Australia, which is rather remarkable considering the nation only has about 24 million citizens.
“We’ve got a squeaky clean reputation, and that’s actually worth a lot more to us than dipping into this,” said James Snodgrass, principal of Sydney’s Forsyth Real Estate, to Reuters.
This does not exactly make Australia unique, as many banks in the U.S. and Europe do not allow bitcoin-affiliated accounts, but this represents the first concerted organized effort by the Australian state to shut down the virtual currency machine.
“It really runs on people using bitcoin, and if nobody uses it, then it’s worthless,” said University of Technology Sydney Senior Finance Lecturer Adrian Lee.
The bank shutdown came as something of a surprise, given that a government inquiry as recently as August recommended removing sales tax for people who buy bitcoin. Banks were under no legal obligation to shut down those accounts, according to the Australian anti-money laundering agency (AUSTRAC).
The Australian Bankers’ Association (which represents the “Big Four” Australian banks) explained that bitcoin’s “lack of transparency and regulatory oversight raises a number of risks for users and also poses risks for the payments system, the integrity of the financial system and the erosion of the tax base.”
The remaining unshuttered exchanges now face a choice: wait to be shut down, get sneaky with small bank accounts or move offshore.
“It makes it, obviously, hard to take payments from our customers, but we have a couple of relationships left,” said Andrew Smith, general manager of a Melbourne-based exchange.
Smith plans to move the business offshore.
With banks saying no suddenly, business seems to be following suit.
“If governments begin to aggressively attack the whole idea of cryptocurrencies and give it a bad name, it might have an adverse effect on our brand by accepting it,” said David Brim, cofounder of offroad vehicle maker Tomcar Australia, which has sold one car using bitcoin since introducing it in November 2014.
To check out what else is HOT in the world of payments, click here.