Bitcoin firms dumped by National Australia Bank as 'too risky'

http://www.theguardian.com/world/2014/apr/10/bitcoin-dumped-by-national-australia-bank-as-too-risky

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The National Australia Bank is severing ties to digital currencies, saying they are too risky.

NAB has sent letters to business customers who primarily trade in bitcoin and similar cryptocurrencies saying their accounts would be closed on 2 May.

The letters say an internal review concluded that ties with digital currency providers pose an unacceptable level of risk to NAB's business and reputation.

NAB has never banked or traded in digital currencies, but has provided banking services to companies that do.

Confirming the move, a spokesman said: “NAB continually reviews its risk profile and the businesses we bank, ensuring NAB's activities are in the best interest of our customers and our shareholders.”

The decision comes after recent moves by the Bank of Ireland and the Bank of Montreal to distance themselves from customers who trade in digital currencies.

It also comes a month after the Japanese bank Mizhuo was named in US and Canadian lawsuits brought against the bankrupt Mt Gox exchange, to whom it provided banking services.

Mt Gox, the world's biggest exchange, announced in February it had been robbed of all its bitcoins in a massive cyber attack.

One of Australia's largest bitcoin traders, CoinJar, which uses NAB to take deposits from clients, said in a blogpost it was disappointed with the decision which would affect many other companies.

But co-founder Asher Tan praised the bank for providing notice.

Australian banks are generally uneasy with digital currencies and regularly shut off banking services, said Robert Masters, chief executive of digital currency trader Krypto Currency Solutions.

Professor David Glance, a bitcoin expert and the director of software practice at the University of Western Australia, said NAB's move smacked of an overreaction.

“Unless they had evidence that the companies they were dealing with were actually doing something in particular, it's an odd reaction,” he said.

He said local Australian digital currency providers were far smaller than massive exchanges such as Mt Gox and therefore posed far less risk.