Bitcoin Trading – The Basics
Bitcoin is a digital currency that cuts out the middleman – banks – and makes transactions cheap.
So what is trading bitcoin and why would you need a bank?
At its most basic, bitcoin trading is buying and selling bitcoin. Bitcoin is frequently traded like stocks, rather than currency, with owners aiming to profit off the cryptocurrency’s volatility.
While you don’t technically need a bank to buy and sell bitcoin, banks do offer benefits. The easiest way to purchase cryptocurrency or sell for regular currency is through a bank account. Banks also provide more security for storing and transactions.
Do Banks Allow Bitcoin Trading in Australia?
The short answer is yes. Trading bitcoin and other cryptocurrencies is legal in Australia, and Australia’s banks support some transactions. However, Australian banks and financial institutions are overall resistant to cryptocurrency risks. Most do not serve businesses that operate as exchanges, dealers, or issuers of cryptocurrencies.
Why? Banks are concerned about the risk. Leading banks are still lagging in accepting cryptocurrency because they’re worried about the volatility, risk management, how to manage transactions securely, and lack of regulation.
Cryptocurrencies have also been associated with “dark money.” A study in 2017 by the University of Technology Sydney estimated that around half of all cryptocurrency transactions connected to illegal activity.
The major Australian banks allow users to buy and sell cryptocurrencies. These banks include:
- Commonwealth Bank of Australia
- Australia and New Zealand Banking Group (ANZ)
- National Australian Bank (NAB)
- Westpac Bank
The Commonwealth Bank does not permit the use of a credit card in crypto transactions.
Can You Buy Bitcoin Through ANZ Bank?
Yes, you can purchase bitcoin and other cryptocurrencies with an ANZ bank account. Cryptocurrencies are bought and sold on exchanges. The leading cryptocurrency exchange in Australia is the Independent Reserve.
Currently, ANZ allows bitcoin transactions with ACH or wire transfer, debit card, and credit card. However, many cryptocurrency exchanges, including the Independent Reserve and others like Coinbase, no longer allow transactions linked to credit cards.
To buy bitcoin with your ANZ bank account:
- You first need to register an account with a cryptocurrency exchange.
- From there, you will be able to link a payment method such as a credit or debit card, or bank account number.
- The preferred transaction for most banks and exchanges is to link a debit card or bank account directly.
- You can then use those funds to buy bitcoin or other cryptocurrencies.
Bitcoin traders should be aware that ANZ and other Australian banks are still somewhat hostile to cryptocurrencies. You may want to explore other popular bitcoin banking solutions.
Will ANZ Block Your Account for Aggressive Bitcoin Trading?
ANZ states that they allow their customers to buy and accept payment of cryptocurrencies. However, they do not support businesses that operate cryptocurrency exchanges. Their Pay Anyone transaction system will enable individuals to transfer anywhere from $1,000 to $25,000 depending on the customer’s level.
However, in a 2018 statement to the Australian Broadcasting Corporation, ANZ said that they monitor transactions for unusual behaviour or amounts, to protect against fraud. Some ANZ customers allege that the bank closed their accounts for aggressive bitcoin or crypto trading. One Australian trader who runs a crypto exchange is currently suing ANZ for discrimination after they closed his account.
Does ANZ Support Other Alternative Cryptocurrency Instead of Bitcoin?
Yes, ANZ supports alternative cryptocurrencies. You can purchase and accept payment of bitcoin, ethereum, and other altcoin options.
Banks also use Ripple. Ripple is both a cryptocurrency (called XRP) and a platform supporting currency transactions. Ripple’s technology transfers within seconds without the need for a centralised authority. It’s cheaper, faster, and more power-efficient than traditional currency transactions.
Ripple is gaining popularity among central banks and financial institutions. RippleNet is a group of over 200 financial institutions based in over 40 countries.
However, a payment platform owned by the Reserve Bank of Australia and Australian banks is taking Ripple to court for trademark violations.
Conclusion – The Reality of Banking with Crypto
Trading bitcoin or other cryptos can be an excellent way to hold assets and make significant gains—or big losses.
While banks know they have to be ready for a world of cryptocurrencies, the banking industry as a whole is highly risk-averse. Many banks, including ANZ and Australia’s big four, are hesitant to engage with cryptocurrencies fully. Crypto traders allege that banks regularly discriminate against them by closing their accounts or making transactions more difficult.
However, the world is slowly warming up to crypto. Savvy crypto traders do their research, watch their transactions, and start small.