Despite the huge growth of cryptocurrencies experienced in 2021, Australia’s top financial and lending institutions namely the National Australia Bank (NAB), Westpac Banking Corporation (WBC) and Australian Securities Exchange (ASX) refused to do business with cryptocurrency exchanges earning criticisms from crypto businesses.
Many firms such as Singapore-based payments and remittances company Nium accused them of stymieing competition by refusing to do business with them during a parliamentary hearing exploring cryptocurrency regulations held Wednesday, September 8.
Local digital currency exchanges including Bitcoin Babe Pty Ltd and Aus Merchant Pty Ltd went to the hearing to air their grievances to the committee saying that the banks won’t do business with them.
‘Today, fintechs are always one decision away from closing their businesses,’ Michael Minassian, Nium APAC head of consumer said.
He also added in his statement that it’s time to cast an appropriate light on these anti-competitive practices that force crypto exchanges to seek public listings overseas.
Out of the 40 countries that Nium services, the company said it was de-banked only in Australia.
Fintech Australia Chief Executive Officer (CEO) Rebecca Schot-Guppy also told the senate committee that around 150 members of the organisation have been de-banked by financial institutions without any chance of appealing to the decision.
‘I would say at least 100 of them are fintech businesses, given that the highest amount of de-banking occurs probably in that payments space but this is also an issue for our wealth tech businesses,’ Schot-Guppy said.
According to the CEO, fintech companies can’t operate their business without transaction accounts or access to different payment rails. This can cause an array of effects on the companies’ operations including not being able to find a replacement banking partner to continue their services.
To defend its actions, NAB Chief Executive Ross McEwan said that the bank did not have crypto-excluding policies but would only engage in such services if the risks can be tolerated and profitable for the company.
‘We have to look at where does cryptocurrency go, along with a number of parties like the reserve bank and regulators. And how do we manage it? And what’s the risk inside the Bank of dealing with cryptocurrency providers as well,’ he said during the hearing. ‘It’s one of the emerging issues that we are looking at – what should our relationship be, if at all, with cryptocurrency.’
WBC Chief Executive Peter King also backed the concerns stating that the anonymity of cryptocurrency made it hard to meet bank requirements of anti-money laundering and counter-terrorism financing.
To address these concerns, Schot-Guppy forwarded a suggestion that a self-regulatory regime as seen in the Buy-Now Pay-Later space can work well in the crypto space.
‘We’ve seen the self-regulatory codes work really well and I think the pace innovation is occurring in the crypto sector, it makes sense for a self-regulatory code rather than a full licencing regime,’ she told the committee.
However, Senator Andrew Bragg, committee chair of the parliament hearing, rebuked the statement saying that the government would go backwards if it accepts the self-regulation policies in the crypto sphere.
‘To be candid, the trend in this cryptocurrency space is not going to be self-regulation. We already have some regulation around the registration of currency exchanges, and so I think we’re sort of heading in the other direction on this one,’ he said.
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