Bitcoin loses shine in Australia – last month banks closed the accounts of 13 of the country’s 17 bitcoin exchange

Concerns about bitcoin’s potential crime links mean many businesses have stopped accepting it, a trend accelerated by Australian banks’ move last month to close the accounts of 13 of the country’s 17 bitcoin exchanges. The development is a blow to hopes of bitcoin fans that the currency can play a significant role in everyday business transactions in developed economies, with Australia once seen as one of its most promising markets. It is estimated to hold 7 percent of the currency’s $3.5 billion global value, a sizeable figure in a country of just 24 million people.

The 13 Australian bitcoin exchanges whose accounts were closed by the banks have shut operations.The remaining four have had their accounts frozen, and now face three options: close, move overseas or spread their business into several smaller bank accounts to avoid detection by their banks.

Buyabitcoin.com.au, one of the remaining four exchanges, said it is still considering its options.
„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 the Melbourne-based exchange. Smith declined to identify which bank his firm is now using from fear of repercussions but said he plans to move the business offshore.

Although most mainstream banks in Europe and the U.S. already refuse to keep bitcoin-affiliated accounts, developments in Australia represent the first coordinated shutdown of bitcoin exchanges by a country’s banking system.

The move makes it much harder for people to convert regular currencies in to or out of bitcoin, threatening its long-term value.
„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.

In the U.K. and the U.S., most large banks have already cut ties with bitcoin account holders, but lack of industry co-ordination has left room for individual lenders to support the currency, including Germany’s Fidor Bank AG, which operates in Britain, and tech-focused Californian lender Silicon Valley Bank.

Source: reuters.com