2014-2-10 Business Insider : Aussie Technologists To Open Bitcoin Bank This Year

[bobdude17]

CEO Craig Steven Wright said Denariuz Bank would begin accepting deposits in the second half of 2014 and would eventually offer Bitcoin-based equivalents of conventional savings accounts, term deposits, credit and debit cards, and loans.

Wright said Denariuz would launch with a global pool of more than 100,000 Bitcoin ($A73.6 million) from its backers.

Eventually, the bank hopes to have a million customers globally.

http://www.businessinsider.com.au/aussie-technologists-are-opening-the-worlds-first-bitcoin-based-bank-this-year-2014-2




Wow.

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[Lethn]

I seriously hope they've done the legal paperwork for this, the Australian government is otherwise going to stamp on them and stamp hard.

[DeathAndTaxes]

I seriously hope they've done the legal paperwork for this, the Australian government is otherwise going to stamp on them and stamp hard.

At present, however, the bank – dubbed Denariuz Bank in honour of the ancient Roman coin, according to its founder, Dr Craig Steven Wright – has yet to attain an APRA licence.

http://www.bankingday.com/nl06_news_selected.php?act=2&stream=1&selkey=16114&hlc=2&hlw=

Not really sure why they decided to announce this before becoming licensed.  Because I am sure being Bitcoin related is going to make the bank license process so much easier right?

[bryant.coleman]

I seriously hope they've done the legal paperwork for this, the Australian government is otherwise going to stamp on them and stamp hard.

The Australian government is not as rabidly anti-Bitcoin as some of the other governments (India, China.etc). So let's hope for the best.

[zeetubes]

"Not really sure why they decided to announce this before becoming licensed.  Because I am sure being Bitcoin related is going to make the bank license process so much easier right?"

I imagine it was a strategic decision to announce it before they have final approval. Sounds like they have pretty significant investor backing and those guys would be pissed at the government if the application was denied, which would make the authorities appear business unfriendly. I think they made the right move. This is exactly what the bitcoin market needs imo: a bitcoin-friendly bank, in a strong banking environment such as Australia, that can service customers from all around the globe. This is the sort of initiative that would make the US banks sit up and take notice. I'll keep my fingers crossed that it comes to fruition. I would definitely think about becoming a customer.

Thanks for the link OP! That was a nice article.

[LiteCoinGuy]

very interesting times for btc. thanks for that piece.

will there be an insurance for the funds?  

[cryptoanarchist]

Why would I deposit bitcoin in a bank when it is so much easier to keep it myself?

[Barek]

Why would I deposit bitcoin in a bank when it is so much easier to keep it myself?

Not everyone has the technical expertise or wants to deal with the process, interest, fast secure transactions between two bank customers (off-chain transactions).

On another note, it's easy to announce all kinds of things. More doing, less announcing.

[sid280]

As an Australian, with friends who work for banks and major accounting firms - I *honestly* can't see this being approved by our government. The big banks here flag all BTC transactions as possible fraud, and ASIC (the government body that regulates companies) hasn't got many good things to say about BTC.

The problems I can see with using BTC for Credit Cards and Loans, is the differences and movement between BTC and AUD, as well as interest and taxes. Here's some scenario's which might need to be worked out.

----------------

Our GST is at 10% - so currently, selling 1 x BTC (~$750 AUD today) - would require the company/customer to pay $75 GST - which means the total cost for the customer would be $750 + $75 = $825. Who would buy a BTC worth $750 for $825?

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Exchange rate vs income tax. Any money a person makes from BTC will need to be taxed, how are they going to tax it? Are they going to calculate your net worth from your holdings of BTC like they do with shares? If you buy 10 coins at $1000 AUD - and they jump to $20,000 AUD each around tax time - do we need to pay capital gains tax on $200,000 AUD - even though the bitcoins haven't been sold for AUD?

----------------

Interest Rates - If someone gets a BTC credit card or loan - how do they pay the interest on that or deal with huge price increases? Same figures again, imagine we get a loan for 2 x BTC ($2000), and the price jumps from $1k to $20k - without direct access to BTC, does it mean their debt will have gone from $2k to $40k ? How does a customer obtain the ~0.01 BTC required for interest? do they need to buy BTC and pay the bank with that - or do they need to pay in AUD for the hugely inflated interest price?

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I'm no financial expert - but I can see things like this being a problem when trying to get ASIC and APRA approval

[zeetubes]

As an Australian, with friends who work for banks and major accounting firms - I *honestly* can't see this being approved by our government. The big banks here flag all BTC transactions as possible fraud, and ASIC (the government body that regulates companies) hasn't got many good things to say about BTC.

 

Those are great points. I went back and reread the article. If I'm understanding correctly, what they intend to establish is a crypto-currency bank, and other currencies as needed. The CEO wants it to be based in Australia but it could probably be based in any country and they are talking with regulators in the US, UK and Singapore so that they also comply with those countries' regulations. It will almost certainly take customers from anywhere. They will accept deposits directly in BTC but will exchange into fiat when needed. These are just assumptions which may be off the mark. I have no idea how a BTC credit card would work. If it does get off the ground then all of those points you raised will apply to australian customers when they convert to AUD. People from other countries will have to deal with their own tax laws. Maybe they're hinting to the Australian government that if they base it in another country then the Aussies will miss out on a good business opportunity. Perhaps trying to force them into a decision which I'm sure the regulators don't want to make. Either way, it will be fascinating to see how it pans out.

[hostmaster]

CEO Craig Steven Wright said Denariuz Bank would begin accepting deposits in the second half of 2014 and would eventually offer Bitcoin-based equivalents of conventional savings accounts, term deposits, credit and debit cards, and loans.

Wright said Denariuz would launch with a global pool of more than 100,000 Bitcoin ($A73.6 million) from its backers.

Eventually, the bank hopes to have a million customers globally.

http://www.businessinsider.com.au/aussie-technologists-are-opening-the-worlds-first-bitcoin-based-bank-this-year-2014-2




Wow.

Yes it's great news!

[Foxpup]

As an Australian, with friends who work for banks and major accounting firms - I *honestly* can't see this being approved by our government. The big banks here flag all BTC transactions as possible fraud, and ASIC (the government body that regulates companies) hasn't got many good things to say about BTC.

Actually, most Australian banks are Bitcoin-friendly (I think Commbank is about the only one that isn't), and ASIC (along with AUSTRAC and ATO) have been pretty neutral.

Our GST is at 10% - so currently, selling 1 x BTC (~$750 AUD today) - would require the company/customer to pay $75 GST - which means the total cost for the customer would be $750 + $75 = $825. Who would buy a BTC worth $750 for $825?

Nobody, but not because of the price. Nobody would buy BTC from an exchange so incompetent that they don't know that financial instruments are except from GST. Only trading fees are subject to GST. Why do you think Australian bitcoin exchanges haven't been shut down by the ATO?

Exchange rate vs income tax. Any money a person makes from BTC will need to be taxed, how are they going to tax it? Are they going to calculate your net worth from your holdings of BTC like they do with shares? If you buy 10 coins at $1000 AUD - and they jump to $20,000 AUD each around tax time - do we need to pay capital gains tax on $200,000 AUD - even though the bitcoins haven't been sold for AUD?

No. You only owe capital gains tax when/if you sell or otherwise trade your bitcoins.

Interest Rates - If someone gets a BTC credit card or loan - how do they pay the interest on that or deal with huge price increases? Same figures again, imagine we get a loan for 2 x BTC ($2000), and the price jumps from $1k to $20k - without direct access to BTC, does it mean their debt will have gone from $2k to $40k ?

Yes.

How does a customer obtain the ~0.01 BTC required for interest? do they need to buy BTC and pay the bank with that - or do they need to pay in AUD for the hugely inflated interest price?

The former would probably be preferred, but either way would likely be acceptable.

[zeroday]

This will probably be the only bank capable to survive coming worldwide economic slump and depression.

[LiteCoinGuy]

Why would I deposit bitcoin in a bank when it is so much easier to keep it myself?

one reason: an insurance.

[cryptoanarchist]

Why would I deposit bitcoin in a bank when it is so much easier to keep it myself?

one reason: an insurance.

lol..yeah, right! More like...

http://www.youtube.com/watch?v=_nVk25ZvTkU#t=0

[Phinnaeus Gage]

very interesting times for btc. thanks for that piece.

will there be an insurance for the funds?  

"Insurance? I don't have to give any stinking insurance!
I just got my patent approved for inventing Bitcoin."