The Australian government is keen to be seen as a world leader in the regulation of crypto assets. It’s easy to see why – a December 2021 report said the digital asset economy could be worth over $68 billion and employ over 200,000 people in Australia by 2030.
As Capital.com previously reported, the current administration has planned to consult on establishing a licensing framework for digital currency exchanges.
However, its strategy for tackling the thorny issue of banks refusing to provide services to businesses and individuals operating in the crypto space is quite lukewarm and so far only extends to “receiving advice from the Advice to financial regulators and other relevant agencies on the underlying causes”.
Andrew Bragg, chair of the select committee on Australia as a technology and financial hub, said banks should “stop debanking hard-working Australians”.
Banker of lawful services
It refers to a warning from the Australian Center for Transaction Reporting and Analysis that unbanking legitimate and lawful financial services firms may increase the risk of money laundering and terrorist financing, as well as having a negative impact on the economy.
It was reported last October that Allan Flynn, owner of Canberra Bitcoin, had settled an unbanking complaint against ANZ.
The bank said it closed its accounts due to the money laundering and terrorist financing risk it perceives among the exchanges and denied any responsibility.
However, he also acknowledges that the trader’s unbanning could have constituted unlawful discrimination and that this was done without contacting him for further information on his activities.
“Institutional Control of Consumers”
Flynn did not respond to requests for comment, but other traders were keen to talk about how this issue has affected their businesses.
Michaela Juric, founder of trading firm Bitcoin Babe, said following her participation in the select committee hearing on Australia as a technology and financial hub in September 2021, she was debanked by two institutions financial.
“One of Australia’s largest banks (and its subsidiaries) recently went a step further to discriminate against digital currency exchanges that use POLi payments [an Australian digital payment network] to process their customers’ payments for cryptocurrencies in their own accounts,” she says.
“It’s a troubling step in the direction of institutional control over consumers, dictating where they can and cannot spend.”
AML regulation is a problem
Zerocap CEO Ryan McCall said that in addition to the removal of banking, transfers to businesses are blocked on the customer’s side (by their bank), preventing them from funding their account or settling debts. transactions.
“It happens even with sophisticated investors moving money to regulated companies like ours,” he says. “This is likely to remain a problem until banks become more familiar with AML CTF (Anti-Money Laundering and Anti-Terrorist Financing) regulations, which unfortunately is not going to happen soon.”
There have been many cases in Australia and overseas of crypto companies being denied access to financial services, says Dimitrios Salampasis, senior lecturer in fintech innovation and entrepreneurship at Swinburne Business School.

“It could be argued that perceived reputational risk may be fueled by ideological or political controversies rather than a case-by-case determination of the risk associated with each client.”
Less arbitrary debanking process
“Hopefully, the regulatory provisions will bring clarity and introduce reform measures that allow for robust risk mitigation mechanisms,” he adds.
PwC Australia director Sagan Rajbhandary said media and political talk of debanking has put pressure on banks and anyone now deprived of access to banking services is likely to have gone through a process of taking more rigorous decision.
“The AML and know-your-customer (KYC) practices at many crypto companies aren’t particularly robust,” says Zennon Kapron, managing director of Kapronasia.
“For a bank, the risk of a fine or reprimand from a regulator because of a KYC or AML failure is simply not worth the risk, especially in Australia where these practices have been the subject of intense government scrutiny over the past few years.”
Australian banks slow to embrace crypto
Jonathon Miller, managing director of Kraken Australia, admits Australian banks have been slow to embrace crypto.
“That being said, there have been some very supportive partners and with signs of massive crypto adoption around the world, local banks are now starting, perhaps belatedly, to recognize the opportunities in this area,” says- he.
According to Angel Zhong, senior lecturer in finance at the RMIT School of Economics and expert on business trends, the absence of a government bailout or asset guarantee for cryptocurrency exchanges underscores the importance of investor protection regulations.
Zhong also believes that a digital currency from the Australian Central Bank (CBDC) would boost confidence in cryptocurrencies domestically.
Retail CBDC would help
“Government participation in the digital currency space shows that digital finance is the future of finance and can encourage investor participation,” she says.
A December report on the future of the country’s payment systems regulatory framework said the Australian government will have received advice from the Treasury and the Reserve Bank of Australia on the feasibility of a retail CBDC by the end of this year.

Rajbhandary says the creation of an Australian CBDC would be a recognition that cryptocurrency is the way of the future.
However, he also says that awareness and education would impact the trust that individuals can have upon hearing that the central bank is issuing its own digital currency.
“For example, someone who doesn’t really understand cryptocurrencies may view the central bank issuing a cryptocurrency as legitimizing technology and cryptocurrencies in general, thereby gaining trust,” he says. .
Supranational Digital Currencies
Darcy Allen, principal investigator at RMIT University’s Blockchain Innovation Hub, agrees that a CBDC could increase investor confidence in digital assets, but warns that in the longer term, they will struggle to compete with innovations in supranational digital currencies.
Kapron questions whether Australia really needs a central bank digital currency, noting that many economies in Asia are considering stablecoins that address many of the same issues but with less operational complexity.
This point is echoed by Juric, who suggests that by creating an “open market” dynamic, Australia could avoid the concept of monopoly attached to a CBDC and provide more opportunities for innovation in other sectors – at inside and outside the blockchain – which would otherwise be prevented by a CBDC due to an institutional entity deeming the opportunity too risky.
“With impending regulatory upgrades being implemented to bring consumer protections surrounding cryptocurrency (including stablecoins) in line with those of other traditional financial sectors, it is possible that stablecoins will overtake the traditional financial sector as the ‘economy of choice,’” she says.
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The difference between trading assets and CFDs
The main difference between trading CFDs and trading assets, such as commodities and stocks, is that you do not own the underlying asset when trading a CFD.
You can always profit if the market moves in your favor or suffer a loss if it moves against you. However, with traditional trading, you enter into a contract to exchange legal ownership of individual stocks or commodities for cash, and you own them until you sell them again.
CFDs are leveraged products, which means that you only have to deposit a percentage of the total value of the CFD transaction to open a position. But with traditional trading, you buy the assets for the full amount. In the UK there is no stamp duty on CFD trading, but there is when you buy shares, for example.
CFDs attract overnight costs to hold trades (unless you are using 1-1 leverage), which makes them more suitable for short-term trading opportunities. Stocks and commodities are more normally bought and held longer. You might also pay a commission or brokerage fee when buying and selling assets directly and you would need a place to store them securely.
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