The Australian government says the growing trend to cut services to Australian cryptocurrency companies could lead to undesirable consequences, such as reducing transparency in the industry.
Australian Treasury June 28 published An official statement discussing potential policy responses to decentralization of the Australian banking sector. The agency noted that banking cancellations occur when banks refuse to provide services to customers, citing issues such as anti-money laundering (AML), sanctions compliance, and reputational risk considerations.
According to Treasury, there is an apparent lack of data on debanking practices in Australia, making it challenging to design effective policy responses. “The government acknowledges the importance of insightful data in monitoring any potential policy response to debankisation,” the statement read. The authority added:
“The government recognizes the seriousness of debanking and understands that inaction on this issue will stifle competition and innovation in the financial services industry and could force businesses to go underground and operate entirely on cash.”
Among four policy responses to de-banking, Australia’s Treasury mentioned digital currency exchanges. In particular, the agency recommended that Australia’s four largest banks – Commonwealth Bank of Australia (CBA), Westpac, ANZ Banking Group and National Australia Bank – publish guidance applicable to cryptocurrency exchanges.
The Treasury Department emphasized that it encourages banks to publish data on the requirements and risk tolerance of crypto service providers, the document said.
“The government expects banks to communicate their requirements clearly and proactively to existing and potential customers before refusing or withdrawing banking services,” Australia’s Treasury wrote. The state will also work closely with regulators, banks and affected sectors to ensure “agreed recommendations are effective and achievable”.
related: Binance Australia gave 12 hours notice before canceling banking operations, exec says
Australia’s Treasury moved to protect the local cryptocurrency industry shortly after Australia’s largest bank, CBA, said in early June that it would restrict certain payments to cryptocurrency exchanges due to the risk of fraud. Westpac also previously banned customers from trading with the Binance cryptocurrency exchange in mid-May.
Australia is currently hosting a major blockchain and cryptocurrency event called Blockchain Australia. On June 26, the conference held a panel discussion featuring executives from all of Australia’s “big four” banks, who offered their reasons for shutting down cryptocurrency exchange services.
Australia’s Big Four Banks @commercial Bank @NAB @ANZ_AU About what they’re doing with blockchain – carbon credits, illiquidity and private markets is where it’s at – despite concerns about lack of regulatory transparency
excellent hosting @mikebassina #web3 #BW2023 pic.twitter.com/94k3QPPgn7
— alysesue.eth (@alysesue) June 26, 2023
“One-third of the dollars that are scammed from Australians involve cryptocurrencies and one-third. So that’s our biggest lever to reduce the impact on our clients,” said Sophie Gilder, managing director of blockchain and digital assets at the CBA express.
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