Crypto Unbanking Could Drive Industry Underground: Australian Treasury

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The growing trend to cut services to cryptocurrency companies in Australia could have undesirable consequences like making the industry less transparent, according to the state.

The Australian Treasury released an official statement on June 28 on potential policy responses to unbanking in Australia. Unbanking occurs when a bank refuses to provide services to a customer citing issues such as anti-money laundering (AML), compliance with sanctions, reputational risk considerations and others, noted authority.

According to the Treasury, there is a clear lack of data on debanking practices in Australia, which makes it difficult to design effective policy responses. The government recognizes the importance of relevant data to monitor any potential policy response to debanking, the statement said. The authority added:

The government recognizes the seriousness of debanking and understands that inaction on the issue will stifle competition and innovation in the financial services industry and could drive businesses underground and operate cash-only.

Among the four published policy responses on unbanking, the Australian Treasury mentioned digital currency exchanges. The authority specifically advised the big four Australian banks Commonwealth Bank of Australia (CBA), Westpac, ANZ Group and National Australia Bank to issue guidelines for crypto exchanges.

The Treasury stressed that it has encouraged banks to publish data on their requirements and the risk tolerance of crypto service providers, the document states.

The government expects banks to communicate their requirements to existing and potential customers clearly and proactively before refusing or withdrawing banking services, the Australian Treasury wrote. The State will also work closely with regulators, banks and relevant sectors to ensure that the implementation of agreed recommendations is effective and achievable.

Related: Binance Australia Received 12-Hour Notice Before Unbanking, Executive Says

The measures taken by the Australian Treasury to protect the local crypto industry came shortly after CBA, Australia’s largest bank, said in early June that it would restrict certain payments to crypto exchanges due to the risks of scam. Previously, Westpac also banned customers from transacting with crypto exchange Binance in mid-May.

Australia is currently hosting a major blockchain and cryptocurrency event called Blockchain Australia. On June 26, the conference featured a panel of executives from all major Australian banks, with the executives explaining their reasoning for shutting down services to crypto exchanges.

One in three dollars that are defrauded by Australians hits crypto, one in three. So it’s the biggest lever we have to reduce that impact on our customers, said Sophie Gilder, ABC’s managing director of blockchain and digital assets.

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