Cryptocurrency tests nerves
A Kiwi Bitcoin trader whose investments lost several hundred thousand dollars in value this month is concerned about the future of cryptocurrency in New Zealand.
Bruce Thompson from Palmerston North said there was some frustration and worry amongst investors in New Zealand about the mixed reactions cryptocurrency was getting from banks.
This comes after Australian banks, including ANZ and Westpac, allegedly started freezing accounts using certain cryptocurrency exchanges this week.
Thompson, whose investment fell in value by a third during Bitcoin’s crash in December, said cryptocurrency was like the wild west at the moment.
However, those who had the money to gamble, and could keep their nerve during the crashes, could still come out ahead.
Cryptocurrencies such as Bitcoin have been gaining mainstream traction but they’re also notorious for their use by criminals and terrorists.
Thompson said banks just wanted to be sure they weren’t accidentally facilitating crime, so they would naturally be cautious if they did not have an established relationship with Bitcoin investors.
So when he started seriously investing in cryptocurrency in March, he immediately set up an appointment with the manager at a bank where he’d been a longtime customer, and offered to share all his records.
Adam Lyness, business development manager for Christchurchbased cryptocurrency exchange Cryptopia, said banks and exchanges faced a challenge in safely navigating the rules.
Cryptopia was actively reaching out to banks and government policy makers to discuss the issues.
Lyness said cryptocurrencies were still a niche phenomenon as recently as 2015, but their popularity had exploded.
For example, Cryptopia had 30,000 users and was facilitating $1 million worth of transactions a day in May. By the end of the year the exchange had a million global users, and it had traded $120m worth of cryptocurrency in the past 24 hours.
Kiwibank, ASB and ANZ said they did not specifically target or exclude cryptocurrency users or dealers. But BNZ and Westpac would not provide services to cryptocurrency traders if it was their main business.