The Australian Bank of Queensland has banned property buyers from using home equity to buy cryptocurrencies, the Financial Review reported July 12.
The Bank of Queensland is reportedly the latest institution to bar credit lines from loans to be used for leveraged purchases or trading of cryptocurrencies. The bank justified the ban with the potential high-risk of these kind of investments, stating that while leveraged currency trades can be lucrative, a poor investment decision could prove devastating.
The Bank of Queensland is updating loan contracts, alerting consumers that “any loan purpose that involves the acquisition of or usage of cryptocurrency is unacceptable”.
Borrowers could access loan money from for a property to purchase crypto by using redraw features offered with the mortgage. The borrower could access additional payments to their loan accounts that exceed minimum required payments. According to the Financial Review, most lenders offer the service on variable rate accounts, and there are usually no fees if the request to access money from a redraw is submitted online.
Establishing a line of credit was also a popular way to use loans to buy cryptocurrencies. Borrowers could draw on a line of credit using property equity like an ATM.
A mortgage broker familiar with the market told Financial Review that bankers are making inquiries and tracking borrowers’ accounts to warn them of cryptocurrency trades and funds movements. The broker reportedly said that “they are concerned because the Australian Taxation Office, Treasury, the Reserve Bank of Australia and Austrac are crawling all over it.” According to Financial Review, most lenders continue to oversee and regulate crypto-loans, while claiming that they do not ask consumers how they use borrowed funds.
Last month, Australian tax experts confirmed that the Australian Taxation Office (ATO) is taking stern measures on crypto investors this year. Liz Russell, a senior tax agent at Etax.com.eu, said that the ATO is on the “warpath” to ensure all crypto investors pay the correct amount owed in taxes, and will be “doubling down with its data-matching technology to ensure that Australians are paying any taxes owed through cryptocurrency trading.”
In April, the Australian government announced that cryptocurrency exchanges must follow new anti-money laundering rules. According to the new rules, digital currency exchanges must register with authorities, as well as commit to various reporting and identity checking procedures.