Coinbase: 'Australian banks are normalising the blocking of crypto accounts'

Minseung Kang

Summary

Coinbase said it has raised concerns that major Australian banks are routinely carrying out de facto debanking against companies and users linked to digital assets.
Coinbase said such account closures and transaction restrictions undermine competition and trust and exclude legitimate fintech and the digital-asset industry from the regulated financial system.
Coinbase urged Australia’s parliament to legislate five transparency measures related to debanking, warning that if the current situation persists, innovation across the digital-asset industry and fintech more broadly could be stifled.

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Coinbase, a US digital-asset (cryptocurrency) exchange, has raised concerns that major Australian banks are routinely engaging in de facto “debanking” against digital-asset-related businesses and users.

According to Decrypt, a digital-asset industry outlet, Coinbase said in a submission to the House of Representatives Standing Committee on Economics on the 3rd that “the withdrawal of banking services is hardening into a structural feature of Australia’s financial system, beyond a temporary operational issue.” Coinbase argued that the practice undermines competition and trust and results in legitimate industries being excluded from the regulated financial system.

Coinbase said major Australian banks are obstructing the financial activities of individuals and companies by unilaterally closing accounts or restricting digital-asset-related transactions. It claims these measures infringe consumers’ and businesses’ rights to use their funds.

The submission said debanking has been occurring in a concentrated manner, particularly across fintech and the digital-asset industry. Coinbase stated that “as of 2021, as many as 60% of fintech firms have experienced being denied banking services,” adding that “this issue has not been adequately resolved to date.”

Coinbase urged Australia’s parliament to codify into law five transparency measures recommended by financial regulators in 2022 but not legislated. These include documenting reasons for debanking, notifying customers of the reasons, ensuring access to dispute resolution processes, providing at least 30 days’ prior notice before terminating core financial services, and banks’ self-attestation of compliance. Coinbase also warned that if the banking sector’s widespread practice of blocking accounts is not improved, innovation across the digital-asset industry and fintech more broadly could be stifled.

Meanwhile, citing examples from the European Union, Canada and the United States, Coinbase stressed that Australia needs to align with the global trend of institutionally guaranteeing access to financial services.