National Australia Bank is severing ties to digital currencies, saying they're too risky.
NAB has sent letters to business customers who primarily trade in Bitcoin and similar cryptocurrencies, informing them that their accounts will be closed on May 2.
The letters say an internal review concluded that ties with digital currency providers pose an unacceptable level of risk to NAB's business and reputation.
NAB has never banked or traded in digital currencies, but has provided banking services to companies who do.
Confirming the move, a spokesman said: "NAB continually reviews its risk profile and the businesses we bank, ensuring NAB's activities are in the best interest of our customers and our shareholders."
The decision follows recent moves by the Bank of Ireland and the Bank of Montreal to distance themselves from customers who trade in digital currencies.
It also comes a month after Japanese bank Mizhuo was named in US and Canadian lawsuits brought against the bankrupt Mt. Gox exchange, to whom it provided banking services.
Mt. Gox, the world's biggest exchange, announced in February it had been robbed of all its Bitcoins in a massive cyber attack.
One of Australia's largest Bitcoin traders, CoinJar, which uses NAB to take deposits from clients, said in a blog post it was disappointed with the decision, adding it would affect many other companies.
But co-founder Asher Tan praised the bank for providing notice, saying CoinJar had been dumped by the Commonwealth Bank last year in a much shorter timeframe.
Australian banks are generally uneasy with digital currencies and regularly shut off banking services, said Robert Masters, CEO of digital currency trader Krypto Currency Solutions.
Professor David Glance, a bitcoin expert and the director of software practice at the University of Western Australia, said NAB's move smacked of an overreaction.
"Unless they had evidence that the companies they were dealing with were actually doing something in particular, it's an odd reaction."
He said local Australian digital currency providers were far smaller than massive exchanges such as Mt. Gox and therefore posed far less risk.
WHAT IS A CRYPTOCURRENCY?
Cryptocurrency is a digital or virtual form of currency that isn't issued by any central authority and has no central repository. Bitcoin, which began trading in 2009, is the most influential.
HOW DO YOU GET IT?
Cryptocurrencies can be bought at online exchanges, exchanged for goods or "mined" using complex computer algorithms.
WHAT'S A BITCOIN WORTH?
At the time of writing, one bitcoin is worth about $US427 ($A456.34). Value tends to jump around significantly based on supply and demand.
HOW DO YOU STORE, BUY AND SELL IT?
Most cryptocurrencies are stored in digital wallets - either locally on hard drives or on remote servers. A number of vendors in Australia and around the world offer digital wallet services.
WHERE CAN YOU USE IT?
Cryptocurrencies are designed for exchange in peer-to-peer transactions, but a number of businesses, some quite large, have recently begun accepting bitcoin in lieu of conventional money.
HOW SAFE IS IT?
Not very. There are in-built safety checks but thieves and hackers are rife, as is money laundering. Japanese exchange Mt. Gox was handling the majority of global cryptocurrency transactions before a massive hacking attack forced it into bankruptcy in February.
