Bitcoin in Australia Witnesses Hard Times – 13 Bitcoin Exchanges Closed

Despite the fact that bitcoin is gaining support in the USA and Europe, things are not equally good all over the world. Australian news says that 13 of the country’s 17 bitcoin exchanges have been closed by Australian banks. The remaining four have discovered their accounts frozen which means three possible variants of further development: they can close, move abroad or transfer their affairs in several smaller bank accounts.

General manager of Buyabitcoin.co.au, one of the 4 remaining exchanges located in Melbourne, said that although he is planning to move the business overseas now, he still hasn’t come to a final conclusion. Andrew Smith refused to reveal the name of the bank he is using now and admitted that “although taking payments from customers is obviously hard now, they still have a couple of relationships left.”

The fact of overall shutdown totally contradicts with governmental recommendation to refuse from sales tax for bitcoin transactions taken place just in August. Inquiries about current situation in Australian bitcoin industry were sent to the Australian Bankers’ Association by the so-called “Big Four” banks – Commonwealth Bank of Australia, Westpac Banking Corp, Australia and New Zealand Banking Group and National Australia Bank. In response Tony Pearson, acting chief executive of the association, stated 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”. Interesting that he didn’t confirm that exchanges shutdown had been coordinated.

The events seem to put an end to the expectation that bitcoin can assume significance in highly developed countries with strong economies. Australia represented one of the most promising markets with estimated 7 percent of world’s $3.5 billion global value.

James Snodgrass, principal of Sydney’s Forsyth Real Estate, tells his story of working with bitcoin. He offered his customers to pay home deposits and different realtor fees in bitcoin. Thus he intended to attract international buyers. He seemed to regret his decision almost at once. He was investigated by the federal tax office and although it didn’t find any law violations, his reputation was tarnished. Afterwards Snodgrass admitted: “We’ve got a squeaky clean reputation, and that’s actually worth a lot more to us than dipping into this.”

Current situation does have a negative effect on bitcoin industry in Australia. At least six businesses entered sales in bitcoin in 2014 already express intentions to ditch the currency. David Brim, co-founder of off-road vehicle maker Tomcar Australia, has sold only one car in bitcoin since November 2014. His opinion seems to be generally held by all bitcoin enthusiasts in Australia: “If governments begin to aggressively attack the whole idea of cryptocurrencies and give it a bad name, it might have an adverse effect on the brand to accept it.”