Banks cannot ignore bitcoin, warns Labor senator Sam Dastyari

Labor senator Sam Dastyari has warned Australian banks not to “act like a bunch of ostriches” with their “heads in the sand” when confronting the rise of bitcoins, as he urged ­companies to provide feedback to a ­Senate inquiry into how to regulate the highly volatile digital currency.
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National Australia Bank, Westpac Banking Corp, ANZ Banking Group and Commonwealth Bank of Australia number among 74 organisations that have been approached by the inquiry’s committee, which is chaired by Senator Dastyari.

The list of companies, which was seen by Fairfax Media, also included the Reserve Bank of Australia, the Australian Federal Police, and international firms such as lobby group Bitcoin Foundation in the United States, and online payments behemoth PayPal.

“The fact is the banking sector can’t act like a bunch of ostriches and stick their heads in the sand and ­pretend these digital currencies aren’t a real thing that’s heading their way – it is,” Senator Dastyari told the ­Financial Review.

“Too often you find the banking ­sector has a tendency to try and pretend that change isn’t coming down the pipeline, in a bid to protect what is their own market position,” he argued.

He did, however, concede there were certain parts of the banking sector that realised they had to address the rise of digital currencies, because “it’s the future”.

Australian banks have been highly sceptical and cautious in dealing with bitcoins. Earlier this year, NAB retreated from digital currencies including bitcoin, arguing they were too risky.

Westpac and CBA declined to comment. A spokesman for ANZ said: “We are still considering whether we will be making an individual submission or contribute a submission through the [Australian Bankers’ Association]”.

A NAB spokesman said the bank was considering the terms of reference in the inquiry. “NAB does not bank or trade in unregulated currencies, or have any plans to do so,” he said. A spokesman for the ABA said it was “too early to comment” as they are developing their position on the issue.

The inquiry will evaluate the appropriate definition of crypto-currencies under local tax laws, as well as how Australia will build a regulatory framework that balances the needs of a growing digital currency industry and the broader financial services sector and economy.

It comes after the Tax Office defined bitcoin as an “intangible asset” in August, rejecting the industry’s calls for it to be categorised as a currency.

Bitcoin investments and trading remain largely unregulated across the globe, and has burnt its fair share of investors. The currency has soared as high as over $US1000 ($1150) a unit from less than $US1 just two years ago.

High profile investors such as ­Virgin’s Richard Branson have forked out more than $US300 million for bitcoin ventures, while local companies such as Melbourne’s Bitcoin Group are hoping to cash in on the meteoric rise of the currency by planning a public listing on the Australian Securities Exchange.

Ron Tucker, the chair of the Australian Digital Currency Commerce Association, previously said the inquiry was a critical step in putting Australia on the front foot over virtual currency ­regulation.

“We’re in touch with a whole bunch of leaders, particularly out of Silicon Valley and the bitcoin space, who are really interested in participating,” ­Senator Dastyari said.

The original release of this article first appeared on the website of Wuxi Plastic Surgery Hospital.