Westpac invests in bitcoin startup

Westpac-backed VC fund Reinventure invests in Coinbase

Reinventure, a $50 million VC fund whose largest investor is Westpac, has made a "strategic investment" in bitcoin-focussed startup Coinbase.

Coinbase made the announcement on its blog and a spokesperson for Westpac confirmed the investment.

"We plan to work closely with Reinventure and share insights into the use of digital currencies globally," the Coinbase blog entry stated.

Coinbase provides an online bitcoin wallet, exchange services for the crypto-currency and a range of services for retailers that want to accept bitcoin.

The service has more than 2.2 million users and 39,000 customers.

"Its mission is to be the most trusted bitcoin company in the world and it is investing heavily in next generation security," the Westpac spokesperson said.

"Reinventure's investment will provide key insights into the use of digital currencies and associated technologies."

Earlier investments by Reinventure have included Australian based peer-to-peer lender, SocietyOne, next generation data analytics platform, Zetaris and neighbourhood social network, Nabo, the spokesperson added.

The potential of bitcoin and other digital currencies in Australia is currently the subject of a Senate inquiry.

That inquiry, an initiative of Labor Senator Sam Dastyari, was tasked with assessing the current regulatory environment for digital currencies and the impact on the payments, retail and banking sectors.

Much of the inquiry's public hearing has focused on the impact of the Australian Taxation Office's treatment of Bitcoin.

The ATO is treating of bitcoin as a type of intangible property instead of a form of currency.

That means individuals will be charged GST when they purchase bitcoin, and businesses "will charge GST when they supply bitcoin and be charged GST when they buy bitcoin," explained an ATO submission to the inquiry.

Crypto-currency advocates say that the tax ruling is acting as a fetter on the development of local bitcoin-based businesses.

The inquiry is due to report in August.

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