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World banks split on trust in cryptocurrencies

  • April 28 2021
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World banks split on trust in cryptocurrencies

By Cameron Micallef
April 28 2021

Banks around the world remain divided in views on the cryptocurrency boom, with several UK-based banks announcing they will not engage with business customers who accept payment in bitcoin or other cryptocurrencies. Where does Australia stand?

World banks split on trust in cryptocurrencies

World banks split on trust in cryptocurrencies

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  • April 28 2021
  • Share

Banks around the world remain divided in views on the cryptocurrency boom, with several UK-based banks announcing they will not engage with business customers who accept payment in bitcoin or other cryptocurrencies. Where does Australia stand?

World banks split on trust in cryptocurrencies

Major banks around the world are developing a cautious approach to cryptocurrency, despite its astronomical surge in popularity and price, with UK’s NatWest and HSBC recently announcing their intentions to dissociate with customers working with bitcoin or other crypto coins.

This comes as the price of bitcoin continues to seesaw, reaching an all-time high of $83,000 (US$64,595) on 14 April before succumbing to bearish pressure.

Over the course of the last 24 hours, bitcoin’s value slipped to as low as $60,000 (US$47,000) only to stage a recovery of sorts, with the currency trading at $67,262 (US$52,366) on Tuesday evening.

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Australian banks

Much like the rest of the world, Australia’s big four banks remain divided on their trust in alternative asset classes.

A spokesperson for ANZ confirmed for nestegg that the bank’s policy is to “generally not bank” with businesses that operate as issuers, dealers or exchanges of digital or cryptocurrency “as they are outside of our risk appetite”.

But ANZ is a little more lenient than British banks, with the spokesperson confirming that ANZ “does not prohibit” customers buying digital or cryptocurrencies or accepting them as a form of payment.

“We monitor transactions for unusual behaviour to protect against potential fraud and in line with our regulatory responsibilities,” ANZ said.

And much like the Bank of England, the Reserve Bank of Australia (RBA), in partnership with Commonwealth Bank of Australia and the National Australia Bank (NAB), has started exploring the issuing of its own digital currency – the central bank digital currency (CBDC).

The CBDC would be a new form of digital money issued by the RBA to be used by both households and businesses.

“With this project, we are aiming to explore the implications of a CBDC for efficiency, risk management and innovation in wholesale financial market transactions,” RBA assistant governor Michele Bullock said in November last year.

And while the CBA and NAB are partnering with the RBA on this project, Westpac has not made its feelings known.

At the time of writing, Westpac had not replied to nestegg’s enquiry.

Europe

Australia and the UK are not the only ones exploring the possible launch of their own currency, with the European Central Bank announcing that it too is looking to meddle in digital. 

The bank responsible for EU’s monetary policy last year issued what it called a “comprehensive report” into the potential for a digital euro, but its president, Christine Lagarde, confirmed last month it would take at least another four years before the technology is ready.

Having left the EU, the UK is taking charge on its own with the launch of an HM Treasury and Bank of England CBDC task force just this week to assess the “benefits, risks and practicalities” of creating a so-called Britcoin.

US bank

The US banks, however, appear to be reacting very differently to their Australian and UK counterparts.

The Federal Reserve confirmed recently it does not plan to create its own digital currency in the near future, although it is said to be studying the potential costs and benefits of a digital dollar.

Both Morgan Stanley and Goldman Sachs are now offering their wealth management clients the opportunity to invest in bitcoin.

There is also an ongoing project between the Federal Reserve Bank of Boston and MIT focused on CBDC.

Earlier this year, Fed Chairman Jerome Powell said of crypto during a virtual summit hosted by the Bank for International Settlements: “They’re highly volatile – see bitcoin – and therefore not really useful as a store of value.”

“They’re more of an asset for speculation. So, they’re also not particularly in use as a means of payment.”

“We’re not in a mode of trying to make a decision at this point. We are experimenting with technology,” Mr Powell concluded.

World banks split on trust in cryptocurrencies
World banks split on trust in cryptocurrencies
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

author image
Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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