The Australian Government Responds to the Risk of Cutting Crypto Services
The Australian government is actively addressing the risks associated with cutting banking services to crypto exchanges, as numerous banks have been restricting certain services due to scams.
The increasing practice of limiting services to cryptocurrency companies in Australia may have unintended consequences, such as reducing transparency within the industry, according to government officials.
On June 28, Australia’s Treasury released an official statement discussing potential policy responses to debanking in the country. Debanking occurs when a bank refuses to provide services to a customer, citing concerns such as Anti-Money Laundering (AML) compliance, sanctions, reputational risks, and other factors, as outlined by the authority.
The Treasury highlighted the lack of available data on debanking practices in Australia, making it challenging to develop effective policy responses. The statement acknowledges the importance of gathering insightful data to monitor potential policy responses to debanking. Furthermore, the government recognizes the severity of debanking and acknowledges that failure to address the issue could hinder competition and innovation within the financial services sector, potentially driving businesses to operate underground and solely in cash.
One of the policy responses proposed by Australia’s Treasury focuses on digital currency exchanges. The authority specifically advises the country’s four major banks – Commonwealth Bank of Australia (CBA), Westpac, ANZ Group, and National Australia Bank – to issue guidance that applies to crypto exchanges.
The Treasury emphasizes that it has encouraged banks to disclose their requirements and risk tolerance for crypto service providers. The government expects banks to clearly and proactively communicate their requirements to both existing and potential customers before denying or withdrawing banking services. Australia’s Treasury also plans to collaborate closely with regulators, banks, and the affected sectors to ensure the effective and feasible implementation of the agreed-upon recommendations.
Australia’s Treasury’s actions to safeguard the local crypto industry follow recent announcements by CBA, the largest Australian bank, stating that it would restrict certain payments to crypto exchanges due to scam risks. Westpac had previously prohibited customers from transacting with the Binance crypto exchange in mid-May.
Currently, Australia is hosting a significant blockchain and cryptocurrency event called Blockchain Australia. During a panel discussion held on June 26, executives from all “Big Four” banks in Australia provided their reasons for discontinuing services to crypto exchanges.