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According to the state, the growing trend of reducing services to crypto companies in Australia could lead to undesirable consequences, such as making the industry less transparent.
The Australian Department of the Treasury released an official statement on June 28 on possible policy responses to debanking in Australia. Debanking occurs when a bank refuses to provide services to a customer, citing issues such as anti-money laundering (AML), sanctions compliance, reputational risk considerations and others, the body noted.
Australia clearly lacks data on debanking practices, according to the Department of the Treasury, making it difficult to develop effective policy responses. “The government recognizes the importance of insightful data to monitor any possible debanking policy action,” the statement said. Power added:
“The government recognizes the seriousness of debanking activities and understands that inaction on this issue will stifle competition and innovation in the financial services sector and could lead to businesses going underground and operating exclusively with cash.”
Among the four policy responses released to the debanking, the Australian Treasury mentioned digital currency exchanges. Authorities have specifically advised Australia’s four major banks – Commonwealth Bank of Australia (CBA), Westpac, ANZ Group and National Australia Bank – to publish guidance applicable to cryptocurrency exchanges.
The Ministry of Finance emphasized that it called on banks to publish data on their requirements and risk tolerance of cryptocurrency service providers, the document says.
“The Government expects banks to communicate their requirements clearly and proactively to both existing and potential customers before denying or withdrawing banking services,” the Australian Treasury Department wrote. The state will also work closely with regulators, banks and affected sectors to ensure that the implementation of the “agreed recommendations” is effective and achievable.
Related: Binance Australia Received Notice 12 Hours Before Debanked, Chief Executive Says
The Australian Treasury took steps to protect the local cryptocurrency industry shortly after the CBA, Australia’s largest bank, said in early June that it would limit certain payments to cryptocurrency exchanges due to fraud risks. Earlier in mid-May, Westpac also banned customers from transacting with cryptocurrency exchange Binance.
Australia is currently hosting a major blockchain and cryptocurrency event called Blockchain Australia. On June 26, the conference hosted a panel with executives from all of the Big Four banks in Australia where executives presented their case for shutting down services for cryptocurrency exchanges.
— alysesue.eth (@alysesue) June 26, 2023
“Every third dollar swindled from the Australians is in cryptocurrency, every third. So this is the biggest leverage we have to reduce that impact on our clients,” said CBA Managing Director of Blockchain and Digital Assets Sophie Gilder.