Australian exchanges eliminate debanking fears amid Binance saga, but risks remain

Simar Marwaha
Simar Marwaha
Published on May 19, 2023 10:49 AM

Several CEOs saw a significant rise in users, downloads, or registrations on their businesses as Binance clients apparently search for alternative exchanges with AUD payment ramps.

Australian exchanges eliminate debanking fears amid Binance saga
Source: Binance Academy

Australian-based cryptocurrency exchanges have gathered to allay concerns about contagion after Binance Australia's payments provider was instructed to leave the exchange, although several have cautioned dangers still exist.

Announcing the suspension of its Australian dollar services on May 18, Binance Australia informed customers that its payments partner Zepto had been instructed by its partner company Cuscal to stop supporting the exchange.

Amid the Binance crisis, Australian exchanges allay concerns about debanking

After Binance Australia's payments provider was told to quit the exchange, Australian-based cryptocurrency exchanges banded together to allay fears of contagion, while several have cautioned that risks still remain.

On May 18, Binance Australia alerted users of the suspension of its AUD services, stating that its payments partner Zepto had been given the go-ahead by its partner business Cuscal to discontinue supporting the exchange.

The CEO of Independent Reserve, Adrian Przelozny, told in an interview that he doesn't believe "this is an industry-wide issue as it appears to be Binance-specific," adding that Australian dollar deposits and withdrawals for his exchange "remain uninterrupted."

According to Caroline Bowler, CEO of BTC Markets, "We work really closely with [our payments provider], specifically on scams," therefore she had "no cause for concern."

She stated, "Nothing has warned me that there are any issues with BTC Markets. We have monthly reporting obligations to them and have done so for a considerable amount of time.

There are "only a few" local payment processors that are "crypto-friendly," according to Jonathon Miller, managing director of Kraken Australia. "We've got a really strong relationship with them."

"It's very unfortunate to see a business in the position where they have to cut their client's access overnight," he added.

"It's not good for the customer, it's not good for the industry, but it seems to be part of a bigger story with what's been happening with that enterprise for a while," the author said.

As Binance customers reportedly look for other exchanges with AUD payment ramps, several CEOs saw a substantial increase in users, downloads, or registrations on their services.

Debanking dangers still exist

Despite promises, several of the executives warned that Australia's crypto regulatory climate makes more potential debanking scenarios probable.

Regardless of the most recent Binance news, the possibility of debanking always exists, Bowler noted.

"That is reflective of the regulatory environment in which we operate, or in this case, the absence of a regulatory environment."

This, according to Bowler, is the reason Australia requires "a proper regulatory framework" that would reassure financial institutions about working with cryptocurrency exchanges.

These rules "can have a degree of comfort about the standards which they're operating to," she continued.

Due to exchanges' "inability to get access to banking rails," the local industry now has a "very small pool" of payment service providers, according to Bowler.

Considering the bank failures in the US and the alleged debanking of cryptocurrency firms that followed, Kraken's Miller claimed the issue is not "necessarily a local issue," but he added that it has "certainly been a problem in Australia for a long time."

"There have been other people and industry bodies that have been quite vocal about the relationship being relatively strained between crypto businesses and banking in Australia, and that's not new."

He noted that Kraken already has or was working to get licences for cryptocurrency in "multiple jurisdictions" like Canada, Europe, and the United Kingdom, which have different regulatory frameworks for cryptocurrencies.

Australia is essentially sitting with no regime, he added.

According to Jason Titman, chief operating officer of Swyftx, "it's in everyone's interests for the cryptocurrency industry to have a healthy relationship with our national banks and that comes with responsibilities on both sides."

Let us see how this action affects future crypto regulation.




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