Australian banks’ closure of Bitcoin companies’ accounts under investigation

Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims.

The Australian Competition and Consumer Commission (ACCC) is investigating why Australian banks are closing the accounts of Bitcoin businesses, reported the Australian Financial Review (AFR) on Monday.

Speaking with the AFR, ACCC Chairman Rod Sims said although in its early stages, the investigation has been sending requests to banks to clarify their actions. He said he hopes to get to the bottom of the matter within a couple months.

“It is being investigated. We have already spoken to some banking representatives and sought some information. It is all still early stage, but under way,” said Sims. “We are asking the banks why they acted as they did and what contact there was between them.”

The AFR reported late last month that at least 17 emerging Australian Bitcoin businesses had received letters from several banks telling them their accounts were being closed. Following the news report, Nationals Senator Matthew Canavan wrote to the ACCC, asking for an investigation.

In his letter, the National Party of Australia senator voiced concern that in order to avoid competing with the emerging businesses, Australian banks were putting the viability and prospective of a vibrant Australian industry at risk.

On Monday, he welcomed the news of the ACCC probe.

“We have strong laws against one business obstructing another business competing against it. These laws are even tougher for those companies that have the privileged position of a significant market share,” said Senator Canavan. “Our banks wield great influence in the market and they have a great responsibility under our laws to not misuse that position. I am not sure if that has happened in this instance but there is no doubt that digital currencies do pose a threat to business of banks.”

Finance Magnates reported that Australia’s major banks have been researching the potential of blockchain technology, which powers Bitcoin and other cryptocurrencies, to enhance their own processes. The news outlet said the other three members of the “big four” banks, who were already examining the blockchain, were recently joined by the National Australia Bank.

Pitt Street, Sydney, NSW, Australia (Circa 2010). Australian Bankers’ Association (ABA) is located at
Level 3, 56 Pitt Street.

The AFR said when it contacted the “big four,” they referred inquiries to the Australian Bankers’ Association (ABA), the banking industry body of the country. When contacted by the Australian news outlet, ABA Chief Executive Steven Munchenberg said the association had still to hear from the ACCC regarding the probe being formalized, but would cooperate with the investigation.

Munchenberg denied that Australian banks were acting to limit competition, adding that Bitcoin businesses of the country were a risk to banks’ compliance with Australia’s anti-money laundering and counter-terrorism financing laws.

“We take every suggestion of anti-competitive behaviour incredibly seriously. It is a very serious allegation to make against the industry, so at this stage we will be focusing on proving that those allegations are totally unfounded,” he said. “Those suggestions are just nonsense. This is just banks making sure they are properly compliant to legal requirements.”

Image credits:

Rod Sims’ photo – Via the image library in the media section of ACCC’s website

Pitt Street image – Adam.J.W.C.  (CC BY-SA 2.5)