An Australian Senate Committee has heard several cases of financial institutions denying or terminating banking services to local cryptocurrency and remittance businesses.
In the Senate Select Committee on “Australia as a Technology and Financial Centre” held Wednesday, two crypto exchanges, Aus Merchant and Bitcoin Babe, testified to their repeated denial of services, often with no explanation given by the institutions that denied them.
The purpose of the committee is to review the federal policy framework around cryptocurrency and blockchain technology in the country, among broader issues within the fintech industry.
Michael Minassian, regional head of global payments firm Nium, testified that Australia was the only country of 41 others to have denied banking for Nium’s remittance services.
Bitcoin Babe founder Michaela Juric told the committee her banking services had been terminated 91 times over the course of her small business’ seven-year history.
The committee also heard that Juric and family members had been denied personal banking services, which impacted their ability to establish basic utilities such as an internet service, water and electricity, as well as self-managed retirement funds and insurance.
Juric said little to no reason had been given for the “debanking” and that banks were being “anti-competitive” because they “didn’t like that there was this competition coming through that bitcoin and other cryptocurrencies posed.”
In her submission to the committee, Juric said there was “no opportunity for discussion” over her losing services from some of the country’s largest banks including Commonwealth (CBA), Westpac and Bank of Queensland.
Losing services from CBA was “particularly hurtful” to Juric, according to her submission to the committee. Juric said she was also personally debanked from all CBA accounts, which included an account Juric had held since five years old. Juric claims she is no longer able to access any bank account records or open an account with CBA.
Aus Merchant’s managing director, Mitchell Travers, provided evidence to the committee showing he had lost banking services on four occasions.
“As far as I am aware, it was a risk-avoidance, risk-off attitude,” Travers said. “The reasoning was that we were outside the scope of services for these banks and we weren’t given an opportunity to provide enhanced due diligence procedures.”
Sen. Andrew Bragg asked Travers if he thought the banks considered his company’s registration by the country’s financial watchdog Austrac to be worthless.
“Yes, that’s correct,” said Travers. Juric also said her Austrac registration was never brought up by the banks.
Bragg said the banks had told him the reason for debanking crypto businesses was due to a “lack or low level of regulation” within the industry and asked whether increasing regulation for crypto markets would make the banks more willing to work with crypto firms.
“Sure, that’s a possibility,” said Juric. However, she also warned of the potential for big banks to threaten small crypto businesses and put them out of business.
Travers agreed: “Increased regulation on the custody side is very important.”