Users of Binance Australia are facing disruptions with AUD deposits and withdrawals as Binance was been forced by their ‘third party payment service provider’ (believed to be Cuscal) to terminate PayID services for their Australian account holders.
This “de-banking” situation also impacted Binance Australia’s fiat withdrawals service. Customers have been advised to wait for an undetermined length of time while Binance Australia:
work[s] hard to find an alternative provider to continue offering AUD deposits and withdrawals
Despite the disruptions, customers are still able to send funds to purchase cryptocurrency via credit or debit cards and through Binance’s P2P marketplace. Amidst the uncertainty, Binance Australia has assured users that customer funds are kept safe via their Secure Asset Fund for Users (SAFU), which is a type of insurance fund, designed to protect customers in ‘extreme situations’.
The move came on the same day that major Australian bank Westpac blocked their customers from transacting with Binance, with Westpac saying:
Digital exchanges have a legitimate role to play, but we have blocked access to some overseas exchanges that are used more frequently than others for scams.
The de-banking move against Binance Australia follows a temporary halt by Binance on bitcoin withdrawals due to a technological issue in fees, which failed to adjust for increases in bitcoin gas (transaction) fees. Just last month, Binance Australia was forced to hand back their derivatives Australian Financial Services License (AFSL) after pressure from the Australian Securities and Investments Commission (ASIC), resulting in users being exited from their derivative positions.
De-banking has been a growing concern for fintech startups and crypto companies for some time, with banks and the US government accused of conducting a campaign to de-bank the whole crypto industry.
However, de-banking of legitimate companies is a major issue that can disrupt business operations and force innocent businesses into insolvency, particularly given how central electronic payments are to businesses.
This was acknowledged as a global issue by the Australian Senate Committee in their issues paper, by AUSTRAC and by Blockchain Association in the USA, no changes, such as a “right to banking” have been implemented in any jurisdictions to address the issue. Compounding the challenge is anti-tipping off provisions which prevent a bank from disclosing the reasons for de-banking if those reasons relate to money laundering or terrorism financing concerns.
Against a backdrop of a huge amount spent on AML/CTF compliance annually (estimated at AUD$300B) for relatively little return (estimated at $3B), one industry veteran has called AML/CTF compliance a “joke”, and we suggest further data should be obtained to identify the economic benefits of de-banking based on AML/CTF risk versus the benefits lost to consumers by such de-banking and understanding what alternatives exist from investigation and prosecution of bad actors and criminals who use a highly trackable system like blockchain to transfer value.