ACCC considers inquiry into Australian banks' bitcoin behaviour

23 September 2015 | Accounts linked with bitcoin companies have been closed by a range of banks.

Banks behaving badly?

The Australian Competition and Consumer Commission is considering whether to conduct an inquiry into potentially anti-competitive behaviour by the banks, following the closure of a number of accounts associated with bitcoin companies and a letter from Queensland Senator Matthew Canavan.

At least 17 Australian bitcoin companies have received letters from a large number of banks (including the big four) informing them their accounts will be closed; at least 13 accounts have already been closed, according to the Australian Digital Currency Commerce Association (ADCCA).

In his letter to the ACCC Senator Canavan said that, in addition to the abrupt closure of a number of accounts linked with bitcoin traders, there have also been revelations in recent weeks that "Australian banks have been exploring the potential benefits of digital currency for their own business needs".

For example, there have been reports that the Commonwealth Bank has been working with some of the world's biggest banks to research technologies that are currently being used by digital currencies. Westpac has also recently invested in the bitcoin company Coinbase through its venture capital arm, Reinventure Fund.

So how does all this affect consumers?

Senator Canavan explains that "by effectively 'nipping in the bud' the growth of potential competitors, [the move] is likely to substantially reduce the potential for future competition to the detriment of consumers in the future".

An ADCCA spokesperson told CHOICE that the "de-banking" of bitcoin companies ramped up after the final report from the Senate's digital currency inquiry. The inquiry, of which Senator Canavan was a member, heard evidence of the potential for the bitcoin industry to provide greater competition in the financial services industry, and could potentially benefit consumers through lower costs and greater choice.

A key recommendation from the inquiry was to treat digital currencies, such as bitcoin, as money for the purposes of GST.

"It is impossible to guess motivations [of the banks], however these actions have the potential to shut down Australia's digital currency industry, which will rob the country of a source innovation and consumer choice," an ADCCA spokesperson told CHOICE.

We asked a number of banks about their policies on bitcoin companies holding accounts with them. A Commonwealth Bank spokesperson said: "Commonwealth Bank is unable to comment on individual customers. Commonwealth Bank consistently serves each customer on a case-by-case basis".

Westpac were similarly tight-lipped: "Westpac does not comment on individual customers".