Main Kiwi banks refuse to support bitcoin trading businesses
Wednesday, 7 November 2018
Bitcoin and other cryptocurrencies are facing headwinds as mainstream New Zealand banks refuse to provide accounts.
Cryptocurrencies such as bitcoin are computer-based money, mostly been used in speculative trading, although some retailers accept bitcoin and then convert it back to dollars.
A company called Coingrid was due to launch a trading exchange this month and had to abandon it because four main banks it approached refused to provide banking services.
But taxpayer-funded Callaghan Innovation had no such reservations when it recently gave a grant of more than $300,000 to Auckland-based Vimba to continue its cryptocurrency research.
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BNZ said its policy was not to provide banking services to virtual currency dealers who traded in cryptocurrencies as a business.
'The way cryptocurrencies are designed to work means there’s a clash with some of the legislation that we operate under, specifically around the Anti-Money Laundering and Countering Financing of Terrorism Act 2009,' BNZ said.
ASB said it was unable to comment on specific customers, and the bank reviewed its relationships with crypto-related businesses on a case by case basis.
'Banks are operating in a complex regulatory environment globally and locally with anti-money laundering, sanctions and counter-terrorism financing laws, among the range of regulations with which we are required to comply. Ultimately, our goal is to keep our customers safe, ASB said.
ANZ said it didn't facilitate the issuing, dealing, or exchange of cryptocurrencies, which included bitcoin.
'We take a very cautious approach due to our security and anti-money laundering responsibilities,' ANZ said.
Callaghan Innovation said its grants did not endorse specific technologies, products or companies and its grant to Vimba were approved based on set criteria.
Meanwhile, Coingrid chief executive and co-founder Chai Kim said his colleagues were surprised to discover New Zealand mainstream banks didn't embrace the cryptocurrency movement.
The company had planned an initial coin offering on November 23, and had been in touch with the Financial Markets Authority to ensure it complied with all the rules.
'We still want to set up a trading exchange but it's not looking good a the moment. We were going to do a crowd funding capital raising. But if we can't process New Zealand currency how can we do it?' Kim said.
'There may be other ways around it perhaps by setting up overseas or using overseas banks. We want cryptocurrency to be more accessible to New Zealanders.
'We accept that it has to be regulated to a certain extent but it should not be given unfair treatment without proper consideration…there have been various cases of cryptocurrency businesses and investors having their accounts shut down by banks.
'This undermines New Zealand’s ability to enter the fourth industrial revolution…we are doing our best to comply with local regulations and guidelines,' Kim said.
He said it appeared New Zealand banks were falling behind their Australian counterparts in providing support to new entrepreneurial enterprises.
A cryptocurrency exchange in Christchurch called Cryptopia also faced problems when its bank withdrew support but eventually found a small regional bank prepared to provide accounts.
A Cryptopia spokesman said the company needed bank accounts for general business operations and also to facilitate public access to buying cryptocurrencies and converting them back to New Zealand dollars
International commentators on cyptocurrencies and bitcoin remained divided about their future, with some claiming it will never take off while advocates say bitcoin value is about to surge again for a bull run in 2019.