Cryptocurrency trading has become somewhat of a big deal lately. Recent studies and surveys conducted have also dubbed Australia as the “continent of cryptocurrency” – on some days, over AUD 2 million are processed in BTC trading operations within this country alone.
While trading of cryptocurrencies is undoubtedly on the increase in Australia, it seems like some authorities are not too happy about the way Australians are going about these trading opportunities. The Bank of Queensland in Australia lately banned homeowners from using equity loans to trade cryptocurrencies due to a number of reasons, including the high risks associated with trading with these digital currencies.
Cryptocurrency Investing And Trading In Australia
Millions in Australia have invested in cryptocurrency. Some have gained profit after making successful trades, while others have somewhat lost a significant amount of money. Cryptocurrency trading is a high-risk opportunity – the value of these “coins” can change at any time, often unexpectedly. New coins are also launched almost every day – some of these coins end up being successful, and others fail, sometimes very quickly.
For many people, the risk associated doesn’t concern them. These are the people who know how to do their research and realize which coins they should ideally invest in. They know when to make a trade and when to skip out on a trade. The pros also know how to determine if new coins may be successful or not. Still, a risk exists even for these individuals.
Now, on the other hand, we have the many people who have heard about cryptocurrency trading and decides to give it a shot – making quick and reckless trades, which causes them to lose money, instead of profit. Once the trade is lost, the money is gone.
The high-risk factors associated with cryptocurrency trading has caused financial institutions to become concerned. The Bank of Queensland, along with many others, have noticed that homeowners are turning toward banks and applying for equity loans – once approved, they would use the money that is deposited into their bank account for cryptocurrency trading. When the client loses the money they lend, they would be in a lot of debt and nothing to show for it, except for lost trades.
Bank Of Queensland Bans The Use Of Equity Loans For Cryptocurrency Trading
This has led the Bank of Queensland to issue a new rule that bans all homeowners from taking out an equity loan on their property and using the money to invest in crypto coins for the purpose of trading. The bank has announced that they will not also be monitoring equity loans made by homeowners for transactions that may suggest their involvement in cryptocurrency trading. Should such transactions be noticed, the bank has announced that they will issue out a warning to the client due to this new ban being put in place.
In the report where the Bank of Queensland made their new rules public, they mentioned that their decision was largely affected by certain financial authorities in Australia. The Reserve Bank of Australia, the Australian Treasury, and the Australian Taxation Office were starting to pay more attention to cryptocurrency trading. The primary reason for this is to ensure that citizens of the country are paying the correct amount of tax on the profits they earn through these financial investments.
A Move For Financial Authorities And The People Of Australia
Ultimately, this ban has been established for the protection of the client. Taking out an equity loan and losing the money on trade will put the client in debt – this would be a negative issue for both the financial institution and the client, after all.
It was recently reported that around 29% of Australian households are over-indebted and that the average over-indebted Australian homeowner had an average outstanding debt on their mortgage of $286,400.