The Treasury Department of Australia has expressed concern over the increasing trend of banks in the country cutting services to cryptocurrency companies. The department believes that this could have negative consequences, such as reducing transparency in the industry. In an official statement published on June 28, the Treasury Department addressed potential policy responses to debanking in Australia.
Debanking refers to the situation where a bank refuses to provide services to a customer, citing issues like Anti-Money Laundering (AML), sanctions compliance, and reputational risks. The Treasury Department highlighted the lack of data on debanking practices in Australia, which makes it difficult to formulate effective policy responses. The statement said, “The Government acknowledges the importance of insightful data to monitor any potential policy responses to de-banking.”
The Treasury Department also recognized the seriousness of debanking and the impact it could have on the financial services sector. It stated that inaction on the issue could stifle competition and innovation and drive businesses underground to operate exclusively with cash. To address this issue, the department recommended that Australia’s four major banks, namely Commonwealth Bank of Australia (CBA), Westpac, ANZ Group, and National Australia Bank, should publish guidance specifically applicable to crypto exchanges.
The Treasury emphasized the importance of banks communicating their requirements and risk tolerance to crypto service providers. They expect banks to proactively inform both existing and potential customers of their requirements before refusing or withdrawing banking services. The government will collaborate with regulators, banks, and affected sectors to ensure effective and feasible implementation of the recommendations.
This move by the Treasury Department comes after the Commonwealth Bank of Australia, the largest bank in the country, announced in early June that it would restrict certain payments to crypto exchanges due to scam risks. Westpac also banned its customers from transacting with the Binance crypto exchange in mid-May.
Australia is currently hosting the Blockchain Australia event, a major conference on blockchain and cryptocurrencies. During a panel discussion at the event, executives from the Big Four banks in Australia provided their reasoning for shutting down services to crypto exchanges. They pointed out that one in three dollars scammed from Australians is related to crypto, making it a significant area to address.
The Treasury Department’s efforts to protect the local crypto industry aim to address the concerns raised by banks and find a balance between mitigating risks and fostering innovation. By encouraging banks to be transparent and work closely with regulators, the government hopes to create an environment where the crypto industry can thrive while maintaining the necessary safeguards against illicit activities.