Use of Mortgage Funds for Crypto Speculation Banned by Australian Bank
Bank of Queensland, one of the oldest and the most prestigious financial institutions of Australia, has banned the use of home equity loans for digital currency speculation. It has prohibited its customers from using loans that are leveraged against home equity for the purposes of crypto speculation.
The step taken towards such prohibition is attributed to concerns pertaining to the growing regulatory oversight of the cryptocurrency sector in the country. Cryptocurrency activities in Australia are under the strong scrutiny of the Australian government.
The changes were confirmed by a spokesperson for Bank of Queensland. Bank of Queensland has issued contracts which now caution prospective borrowers stating “any loan purpose that involves the acquisition of or usage of cryptocurrency is unacceptable.”
Lenders in Australia are increasingly monitoring the accounts of debtors for indications that they might be involved in crypto trading and this scrutiny has become a major roadblock for many investors in Australia. Investors and brokers have expressed concerns over such regulatory procedures of the Australian Tax Office (ATO), Treasury, AUSTRAC and the Reserve Bank of Australia. The Lenders and the regulators, on the other hand, are concerned to prevent anything that might worsen the country’s alarming household debt levels which already is among the highest in the world.
Debtors seeking opportunity out of borrowed capital tend to use funds, that are redrawn from their mortgage, just to purchase cryptocurrency. Though it is known that borrowers cannot invest the borrowed capital directly in the virtual currency market because such capital is being paid straight to the vendor. There are other traders who have got the crypto exposure by accessing the line of credit where borrower draws on the predetermined lines of credit accessed against the mortgaged property.
Australian Financial Institutions have also prohibited some other uses of mortgage funds in the past which includes the payment of government penalties or fines, refinancing of payday loans and payments to debt collection agencies.
CoinFrenzy had also published an article detailing the regulatory reforms of ATO to target crypto holders.
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