In a bold move, Coinbase has leveled serious accusations against Australia”s major banking institutions, alleging that they are systematically denying financial services to legitimate cryptocurrency enterprises. This practice, referred to as “debanking,” is claimed to undermine competition and erode trust within the Australian financial landscape.
In a detailed submission to the House of Representatives Standing Committee on Economics, Coinbase highlighted that the actions of the Big Four banks—Commonwealth Bank, Westpac, ANZ, and National Australia Bank—pose significant threats to both businesses and consumers seeking to utilize their financial resources. The exchange identified two primary tactics employed by these banks: unilateral account closures and restrictions on transactions involving digital assets.
Coinbase”s submission emphasized that these practices disproportionately affect the fintech sector, which is crucial for innovation in the financial services industry. According to reports, in 2021, nearly 60% of fintech companies in Australia experienced obstacles in accessing banking services due to the actions of these banks.
The exchange argued that such debanking practices amount to an “unlawful regulatory ban” that could effectively exclude legitimate sectors from participating in the formal economy. Coinbase”s criticism points to the dominance of four major banks controlling a significant portion of payment systems and transaction accounts in Australia, amplifying the potential impact of these restrictions.
Coinbase further noted that the lack of transparency surrounding these banking decisions is detrimental to public confidence in the Australian financial system. The exchange pointed out, “There is nothing that degrades trust in an economy faster than being told you cannot use your own money.”
In response to these allegations, the Australian government has acknowledged the concerns raised and is reportedly progressing with regulatory reforms aimed at addressing gaps in cryptocurrency regulation. Discussions are underway regarding new licensing laws, and the Treasury is engaging with banks to promote greater transparency and fairness in their debanking practices.
Coinbase has urged lawmakers to implement measures that would enforce transparency requirements for banks when they decide to debank customers. These measures include mandating that banks document their reasons for account closures, provide prior notice before closing accounts, and ensure access to a dispute resolution process.
As the conversation around regulatory reform continues, the pressure is mounting on Australian banks to clarify their practices. Coinbase”s submission serves as a crucial reminder of the urgency needed to address these issues, especially as more cryptocurrency companies struggle to obtain essential banking services.
