The growing trend of banks cutting services to cryptocurrency companies in Australia could lead to undesired consequences like making the industry less transparent, according to the country’s Treasury Department.
On June 28, the Australian Department of the Treasury published an official statement addressing potential policy responses to debanking in Australia. Debanking occurs when a bank declines to provide services to a customer, citing issues like Anti-Money Laundering (AML), sanctions compliance, reputational risk considerations and others, the authority noted.
According to the Treasury, there is a clear lack of data on debanking practices in Australia, which makes it challenging to devise effective policy responses. “The Government acknowledges the importance of insightful data to monitor any potential policy responses to de-banking,” the statement reads. The authority added:
“The Government recognises the seriousness of de-banking and understands that inaction on the issue will stifle competition and innovation in the financial services sector and may drive businesses underground and to operate exclusively in cash.”
Among four issued policy responses on debanking, the Treasury mentioned digital currency exchanges. The authority specifically advised Australia’s four major banks — Commonwealth Bank of Australia (CBA), Westpac, ANZ Group and National Australia Bank — to publish guidance applicable to crypto exchanges.
The Treasury stressed it has encouraged the banks to publish data on their requirements and risk tolerance of crypto services providers, the document reads.
“The Government expects banks to communicate their requirements to both existing and potential customers clearly and proactively prior to refusing or withdrawing banking services,” the Treasury wrote. The state will also work closely with regulators, banks and the affected sectors to ensure that the implementation of the “agreed upon recommendations is effective and achievable.”
Related: Binance Australia got 12 hours’ notice before it was debanked, exec says
Australia’s Treasury is moving to protect the local crypto industry soon after CBA — the largest Australian bank — said in early June that it would restrict certain payments to crypto exchanges over scam risks. Previously, Westpac also banned customers from transacting with Binance crypto exchange in mid-May.
Australia is currently hosting a major blockchain and cryptocurrency event called Blockchain Australia. On June 26, the conference had a panel featuring executives from all “Big Four” banks in Australia, with execs providing their reasoning for shutting down services to crypto exchanges.
The Australian Big4 banks @CommBank @NAB @ANZ_AU on what they’re doing in blockchain – carbon credits, illiquid and private markets is where it’s at – though concern over lack of regulatory clarity
Excellent moderating by @MikeBacina #web3 #BW2023 pic.twitter.com/94k3QPPgn7
— alysesue.eth (@alysesue) June 26, 2023
“One in three of the dollars that are scammed from Australians touch crypto — one in three. So it’s the single largest lever that we have to reduce this impact on our customers,” said CBA managing director of blockchain and digital assets, Sophie Gilder.
Magazine: Asia Express: Huobi sues … Huobi? 3AC rises from ashes, Korea crypto contagion
