Is bitcoin dying in Australia?

bitcoin new

Banks and businesses in Australia have ruled out any possibility of using bitcoin after 13 of its 17 cryptocurrency exchanges were closed down last month.

 

Bad news for bitcoin

Bitcoin has been working hard to establish itself as a global mainstream currency for a while. Last month, Bitcoin was seen as a commodity in the United States by the Commodity Futures Trading Commission (CFTC), making it easier to regulate the technology.

Up until recently the cryptocurrency had been making some headway in Australia, with bitcoin debit cards and e-commerce applications being launched across the country. The nation was seen by many as one of bitcoin’s most promising regions, controlling nearly ten per cent of bitcoin’s $3.5bn value.

Australian business owners however have been less than impressed with the potential security risks that are associated with the currency, so aren’t willing to put their reputations on the line.

James Snodgrass, principal of Sydney’s Forsyth Real Estate, attempted to use bitcoin for his company, but was put off by the negative reception he received from customers.

‘‘We’ve got a squeaky clean reputation, and that’s actually worth a lot more to us than dipping into this,’’ said Snodgrass, who parted ways with the cryptocurrency in 2014 after he was investigated by the Federal Tax office, who cleared Snodgrass of any wrongdoing.

With there being no legal implications for those who use bitcoin in Australia, experts are clueless as to why banks and businesses have so abruptly turned their backs on the technology, with the nation’s government encouraging bitcoin use by recommending the removal of sales tax for those who purchase the cryptocurrency.

Tony Pearson, acting chief executive for the Australian Bankers’ Association, wouldn’t give a definitive answer over his nation’s outright rejection of bitcoin, but explained that its ‘‘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.’’

 

What now?

If bitcoin is to have any kind of future in Australia, virtual currency leaders have to go about repairing the currency’s reputation.

13 Australian banks have closed down all of its operations involving bitcoin, with the remaining four having their accounts frozen. This has made a number of merchants question their relationship with the virtual currency.

‘‘If governments begin to aggressively attack the whole idea of cryptocurrencies and give it a bad name, it might have an adverse effect on our brand by accepting it,’’ said David Brim, co-founder of Tomcar Australia, an off-road vehicle distributor, which has sold just one car using bitcoin since November 2014.

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