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article imageOp-Ed: Australian banks freezing accounts, exchanges related to Bitcoin

By Paul Wallis     Dec 30, 2017 in Business
Sydney - The world’s most annoying investment has now become a potential risk, at least according to the actions of some Australian banks. The big Australian banks have been accused of freezing accounts and restricting deposits.
The story has a sort of grim, easy-to-get logic to it. If governments and even Nobel Prize winners have been making impolite noises about Bitcoin, consider the banks, which have to handle any number of transactions. Bitcoin and its variable abilities to translate in to hard cash would be an acquired taste at best.
Specifically, the story so far is that the banks have effectively isolated four Bitcoin exchanges: CoinJar, CoinSpot, CoinBase and BTC Markets. Investors, of course, are screaming blue murder. Just as Bitcoin hits a very negative environment, they’re frozen? Not the best position for any investor. If Bitcoin nosedives further, they could lose a lot more money, and they can’t bail out or reposition.
They may also have the wrong end of this stick. Banks can and do impose terms on services. They may also have statutory obligations regarding accounts and transactions regarding anything from money laundering to unrelated financial irregularities to consider.
Cryptocurrencies do trade a lot in Australia, and it’s not like anyone’s averse to making gigantic profits. If plugs are pulled, they’re pulled for good reasons. The problem is that if the reasons are serious enough, investors aren’t likely to be told much, if anything, about those reasons.
If investor reactions are understandable, they may also be misplaced. Banks don’t mind making money either, and if they effectively shut down a way of making money, the reason cannot be trivial.
I’d draw attention to a few very iffy aspects of Bitcoin in its current mode:
1. Massive increases in value have that “too good to be true” karmic inevitability to them.
2. Price manipulations aren’t impossible with Bitcoin. Quite the opposite; in any commodity, everyone wants to see values go up exponentially. There’s been no resistance to such increases in value in the Bitcoin market until recently, when short selling became a working option in US markets.
3. Bitcoin is still carrying the perception of being a money launderer’s dream. Not everybody is happy with that, and actual money laundering can deliver massive fluctuations in any type of currency.
I wouldn’t go nuts about the Australian banks’ moves in the long term. This may be good housekeeping, or good security, or a risk management position, or a security issue, or all of the above. The fact that the banks are saying nothing at all about the freezes tends to suggest a complex problem with security issues.
Bottom line – Does this mean Bitcoin and cryptocurrencies in general need regulation to avoid situations like this? YES. Investors should at least have some reliable rules to work with, and so should the markets.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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