Bank of Queensland, one of Australia’s oldest banks, has banned the use of home equity loans for digital currency speculative activity. This comes from the concerns related to the increase in regulatory oversight of cryptocurrency in the country.
The new contracts issued by the Bank of Queensland will have caution statements warning borrowers that
Any loan purpose that involves the acquisition of or usage of cryptocurrency is unacceptable.
Earlier this year,Austrac, the country’s financial intelligence agency announced a new rule requiring ‘know your customer’ measures in crypto exchanges throughout Australia. Even the Australian Tax Office has been looking for public feedback on how to make tax profit from cryptocurrency mining.
An anonymous mortgage broker talked about concerns that financial institutions have in terms of digital currency stating that lenders are increasingly monitoring borrower accounts for cryptocurrency deals. The broker said,
They are concerned because the Australian Taxation Office, Treasury, the Reserve Bank of Australia and AUSTRAC are crawling all over it.
The Australian Financial Review also stated that
Lenders and prudential regulators are also concerned to prevent anything that might worsen the nation’s worrying household debt levels, which is already among the world’s highest.
In April 2018, all cryptocurrency exchanges in the country were reminded to comply with the KYC/ACL norms. This gives the Australian authorities a way to monitor the transactions of any cryptocurrency trader that is registered with a domestic exchange in the country.
Even on a global basis, major banks such as JP Morgan Chase,CitiBank and Bank of America have also implemented rules prohibiting customers from using their lines of credit for purchasing cryptocurrency. This is mainly because of the fear of volatile prices that might make the borrowers unable to repay their loans.
This is another scenario in which governments and regulators are increasing control over the cryptocurrency market.