Coinbase Calls Australian Banks’ Actions an ‘Unlawful Regulatory Ban’ on Crypto

TLDR

• Coinbase has accused Australia’s Big Four banks of systematically denying financial services to legitimate crypto companies.
• The exchange claims the practice of debanking is harming competition and trust in the Australian financial system.
• Coinbase highlights two main methods used by banks, including unilateral account closures and restrictions on crypto-related transactions.
• The company argues that such practices disproportionately target the fintech sector and businesses utilizing blockchain technology.
• In 2021, up to 60% of fintech businesses in Australia were reportedly denied banking services by major banks.

Coinbase has accused Australia’s Big Four banks of systematically denying financial services to legitimate crypto companies. The Nasdaq-listed exchange raised concerns in a submission to the House of Representatives Standing Committee on Economics. Coinbase described the practice as a threat to competition and trust in the Australian economy.

Coinbase Blasts Banks for ‘Debanking’ Crypto Sector

Coinbase’s submission highlights how Australian banks are using two methods to restrict access to banking services. The first is unilateral account closures, while the second is transaction restrictions on transfers involving digital assets. “These actions, referred to as ‘debanking,’ have evolved into a systemic issue,” the company said.

In its submission, Coinbase called out Commonwealth Bank, Westpac, ANZ, and National Australia Bank for impeding the ability of businesses and consumers to use their own money. The exchange added that such practices unfairly target the fintech sector and those dealing with blockchain technology. “The withdrawal of banking services harms the entire economy,” Coinbase argued.

The Impact of Debanking on Australia’s Financial Landscape

Coinbase emphasized that debanking is hurting Australia’s financial landscape, particularly in the fintech sector. In 2021, it was reported that up to 60% of fintech businesses were denied services by Australian banks. Coinbase warned that such actions could lead to an “unlawful regulatory ban,” potentially shutting legitimate sectors out of the formal economy.

The exchange pointed out that with four major banks controlling most payment rails and transaction accounts, this issue is becoming more widespread. The submission also mentioned that the opacity of these banking decisions is undermining public trust in the Australian financial system. “There is nothing that degrades trust in an economy faster than being told you cannot use your own money,” Coinbase said.

Australian Government Responds to Concerns

In response to these allegations, the Australian government has acknowledged the issue and is moving forward with plans for regulatory reform. New licensing laws are being discussed, aimed at closing gaps in crypto regulation. The Treasury has also said it is working with banks to ensure more transparency and fairness in debanking practices.

The Australian government’s recent focus on improving digital payment systems includes addressing issues like debanking. However, Coinbase has called on lawmakers to enforce transparency measures that banks should follow when debanking customers. These measures, originally recommended by the Council of Financial Regulators, include requiring banks to document reasons for debanking, provide notice before closing accounts, and ensure access to dispute resolution.

As discussions around these regulatory reforms continue, the pressure is mounting on banks to adopt clearer practices. Coinbase’s submission highlights the urgency of addressing these issues, as more crypto companies face increasing challenges in securing essential banking services.

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