Coinbase has accused Australia's Big Four banks of systematically denying financial services to legitimate crypto companies, calling the practice a threat to competition and trust in the country's economy.
In a submission to the House of Representatives Standing Committee on Economics, reviewed by Decrypt, the Nasdaq-listed exchange warned that "the withdrawal of banking services, commonly referred to as 'debanking', has evolved from a sporadic operational anomaly into a systemic feature of the Australian financial landscape."
The response, filed last Saturday as part of a parliamentary inquiry into digital payments and innovation, claims that Australian banks are removing banking access through two methods: unilateral account closures and transaction restrictions that halt or limit transfers involving digital assets.
"In Australia the Big 4 banks have implemented policies that impede on people's abilities to use their own money, and remove banking facilities from consumers and businesses," Coinbase wrote, referring to Commonwealth Bank, Westpac, ANZ, and National Australia Bank.
The complaint comes as Coinbase faces new regulatory requirements to obtain an Australian Financial Services Licence from the Australian Securities and Investments Commission under legislation proposed last November, adding urgency to its calls for banking sector reform.
Debanking practices have "disproportionately targeted the Fintech sector and those utilising digital assets and blockchain,” the exchange said.
With four major banks controlling most transaction accounts and payment rails, Coinbase warned that account exits can amount to an “unlawful regulatory ban,” shutting lawful sectors out of the formal economy.
"In 2021, up to 60% of fintech businesses faced denial of service from banks, an issue which still needs addressing,” the exchange said.
While banks often justify closures on AML/CTF grounds, the crypto platform claimed “the opacity of these decisions has engendered a crisis of confidence in the Australian financial system amongst its everyday users.”
"There is nothing that degrades trust in an economy faster than being told you cannot use your own money,” Coinbase noted.
Decrypt has reached out to the Big Four banks for comment and will update this article should they respond.
The concerns come as Australia moves to close crypto regulatory gaps through new licensing laws, after Treasury last year acknowledged debanking and said it was “working with stakeholders to ensure transparency and fairness,” including talks with major banks to gauge its extent.
International precedents
Coinbase cited overseas models to curb financial exclusion, noting the EU guarantees a basic bank account for all legal residents and Canada allows almost anyone to open an account, even without a job or with a bankruptcy history.
Meanwhile, in the U.S., President Donald Trump signed an executive order last August directing regulators to prevent politically or crypto-related debanking, and last month filed a $5 billion lawsuit against JPMorgan, alleging it closed his accounts over his political views following the events of January 6, 2021.
Five measures, still unimplemented
The exchange called on lawmakers to compel banks to adopt five transparency measures originally recommended by the Council of Financial Regulators in response to Senate inquiry findings, but never legislated despite government support announced in August 2022.
The measures include requiring banks to document reasons for debanking customers, provide those reasons to affected customers, ensure debanked individuals and small businesses have access to internal dispute resolution procedures, provide a minimum of 30 days' notice before closing core banking services, and self-certify adherence to these requirements.
Sebastian Sinclair contributed to this report.
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