The Australian crypto ecosystem has been in the news in recent weeks following the growing trend of traditional banks cutting their services to the industry. Accordingly, the country’s Treasury Department has expressed concerns over the recent development stating that it would lead to the collapse of the nascent digital asset sector.
Australian Government Addresses Risks Of Crypto Debanking
The Australian Department of Treasury recently released an exclusive statement outlining their strategies and proposed actions to combat the growing issue of crypto debanking by the country’s traditional finance operators. Debanking refers to a situation where financial institutions refuse to offer their services to customers due to various reasons like concerns regarding Anti-Money Laundering (AML), adherence to government-issued sanctions, and reputation-related risks.
However, the Australian Treasury claims not to have sufficient information regarding the ongoing debanking issue. Thus, it couldn’t develop the appropriate strategy to resolve the issue.
Hence, the department emphasized the need to have enough data points to monitor the implications of the debunking practice on crypto platforms. Nevertheless, the Treasury introduced policy measures to address this issue.
One such measure was to ensure a smooth working relationship between digital currency exchanges, banks and other financial institutions. Hence, the Treasury focused on Australia’s prominent financial institutions: the Commonwealth Bank of Australia (CBA), ANZ Group, Westpac, and National Australia Bank.
It advised these banks to create comprehensive guidelines favoring crypto exchanges operating in the country. In its official release, the Treasury also encouraged banks to disclose information regarding their specific prerequisites and risk thresholds to engage these crypto service providers.
Protecting The Local Crypto Environment
The Treasury’s swift response suggests its decisiveness in safeguarding the crypto ecosystem within the Australian digital financial landscape. This move comes shortly after the CBA, the country’s largest bank, announced its intentions to impose limitations on specific payments to crypto exchanges due to concerns over fraudulent activities.
Earlier, Westpac prohibited its customers from conducting transactions with the Binance exchange mid-last month. The bank’s move added to the growing concerns that Australian banks are unwilling to offer their services to crypto firms.
Nevertheless, Australia is hosting a crypto and blockchain event dubbed Blockchain Australia. One of the event’s highlights was the constitution of a panel involving high-ranking executives from Australia’s prominent “Big Four” banks.
During the panel discussion, these executives shared the reasons behind their platform’s decision to discontinue services to crypto firms, particularly crypto exchanges. The executives further noted that cryptocurrency represents an innovative financial tool that would transform the country’s economy.
However, they stressed that the risks associated with crypto transactions are too complex for the banks to handle without adequate regulatory clarity from the government. According to Sophie Gilder, the Managing Director of Blockchain and Digital Assets at the CBA, one-third of the funds from scam victims and reports in Australia are connected to cryptocurrencies.
The statistic further highlights the crypto industry’s significant influence on customers’ financial well-being. Hence, Gilder emphasized the CBA’s top priority is to create awareness that authorities need to address crypto regulatory irregularities to mitigate scams and their impact on the country’s residents.