The rising trend of banks in Australia limiting services to cryptocurrency companies might drive the sector underground, making it less transparent, the Australian Treasury Department has warned. The Australian government is addressing the potential fallout of severing banking services to crypto exchanges amidst growing concerns over scams.
On June 28, the Australian Department of the Treasury shed light on this matter by releasing an official statement addressing potential policy responses to debanking within the country. The term ‘debanking’ refers to a situation when a bank refuses to provide services to a client, often citing reasons such as compliance with Anti-Money Laundering (AML) rules, sanctions, reputational risks, and others.
However, according to the Treasury, there is a significant lack of data regarding debanking practices in Australia. This dearth of information makes formulating effective policy responses a considerable challenge. Recognizing the importance of insightful data, the government is seeking to monitor any potential policy responses to debanking actively. The statement from the Treasury emphasized the government’s acknowledgment of the seriousness of debanking and its potential impact on stifling competition and innovation within the financial services sector.
In an effort to counteract this issue, the Treasury has laid out four policy responses on debanking. One noteworthy recommendation is directed towards Australia’s four major banks – Commonwealth Bank of Australia (CBA), Westpac, ANZ Group, and National Australia Bank. The authority has advised these banks to publish guidance that would be applicable to crypto exchanges, emphasizing the need for banks to articulate their requirements and risk tolerance regarding crypto services providers.
“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 highlighted in its statement. To ensure the effectiveness of these recommendations, the government plans to collaborate closely with regulators, banks, and the affected sectors.
This move from the Treasury follows recent actions from the CBA – the country’s largest bank – which announced in early June that it would limit certain payments to crypto exchanges due to scam risks. Similarly, Westpac enforced a ban on its customers transacting with Binance, a prominent crypto exchange, in mid-May.
The government’s proactive approach comes at a pivotal moment as Australia is currently hosting Blockchain Australia, a major blockchain and cryptocurrency event. On June 26, a panel at the conference featured executives from all “Big Four” banks in Australia, providing insight into their reasoning for restricting services to crypto exchanges.
“A third of the dollars scammed from Australians involve crypto. It’s the single largest lever that we have to reduce this impact on our customers,” stated Sophie Gilder, CBA’s Managing Director of Blockchain and Digital Assets.
The Treasury’s stance indicates a recognition of the importance of crypto businesses and a determination to maintain a balanced approach between protecting consumers and promoting innovation in the evolving financial landscape. It will be interesting to see how this nuanced approach will shape the future of the crypto industry in Australia, a country recognized for its robust financial sector and increasing interest in digital assets.
