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Senator Bragg says that his government wonât let Aussie banks practice anti-competitive debanking of crypto companies.
Australian banks have been dressing up anti-competitive behavior as regulatory compliance when debanking crypto customers, Australian Senator Andrew Bragg said.
âI believe many banks have been dressing up debanking as a regulatory necessity. In fact, it is often anti-competitive behavior and far more sinister and threatening than it appears on the surface,â the senator for New South Wales said in a prepared address to the Tech Council of Australia on Wednesday.
Denial of banking, or debanking, is when a financial institution chooses to no longer offer banking services to a customer. No reason needs to be given, and banks have the ability to freeze an account instantly or shut it down with very little notice. For crypto customers, banks often cite concerns around Anti-Money Laundering and Counter-Terrorism Financing compliance.
Senator Bragg told Cointelegraph that his Senate committee heard evidence that the banks terminated accounts for âcommercial reasonsâ â a practice âlong been known and flagged by the ACCC [Australian Competition and Consumer Commission].â
âIn other words, they debanked customers to protect their entrenched market position. This is not good enough.â
Giving evidence to the Senate inquiry into âAustralia as a Technology and Financial Centerâ in September, âBitcoin Babeâ ââfounder Michaela Juric said that she had been banned by a total of 91 banks and financial institutions throughout her seven-year history in crypto.
âNo reasons given, no case-by-case assessments or discussions engaged and no recourse available,â she said at the time.
Another Australian digital currency trader, Allan Flynn, won a settlement with ANZ for debanking him on Oct 15. While ANZ denied any liability, the bank offered him a chance to reapply for a bank account. Flynn also has a similar case against Westpac thatâs ongoing.
In Wednesday's address to the Tech Council, Senator Bragg condemned the practice of debanking, saying it âundermines Australia as a crypto hub.â
âHow can you be a hub if you canât get a bank account as a trader, miner, exchange, custodian or investor? You canât.â
Things are changing, however. On Nov. 3, Commonwealth Bank announced it will become Australiaâs first bank to offer customers the ability to buy, sell and hold crypto assets through its CommBank app. According to Bragg, it will be difficult for banks to reconcile an anti-crypto position as they begin to enter the crypto world themselves.
âThe position the banks have historically taken will be hard to sustain with the recent entrance of banks into the crypto world. I will ensure it is not an opportunity for the banks to be hypocrites,â he said in Wednesdayâs address.
He added to this statement, telling Cointelegraph: âI believe it would be hypocritical to allow and encourage customers to use crypto in the app, and then de-bank other customers for doing the same. I am pleased to see banks getting on board with cryptocurrency.â
The Senate committeeâs âCrypto Report,â published on Oct. 20, makes 12 recommendations intended to tackle key issues pertinent to the cryptocurrency sector, including that the Australian government develop a âclear process for businesses that have been de-banked.â
Related: Aussie crypto companies keen to embrace regulations, says senator
Following the reportâs release, the Australian Transaction Reports and Analysis Centre released a statement on Oct. 29 that strongly criticized de-banking.
âThe effect of debanking of legitimate and lawful financial services businesses can increase the risks of money laundering and terrorism financing and negatively impacts Australiaâs economy,â it stated.
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