Australian-based cryptocurrency exchanges have lined up to quash contagion fears after the payments provider for Binance Australia was told to offboard the exchange, though some have warned risks still loom.
On May 18, Binance Australia told users that Australian dollar services were suspended after its payments partner Zepto was told by its partner firm Cuscal to stop support for the exchange.
Independent Reserve CEO Adrian Przelozny told Cointelegraph he doesn’t think “this an industry-wide issue, as it appears to be Binance-specific,” adding the Australian dollar deposits and withdrawals for his exchange “remain uninterrupted.”
BTC Markets CEO Caroline Bowler said she had “no due for concern," adding “we work really closely with [our payments provider], specifically on scams."
A brief note to reassure Aussie crypto traders that @BTCMarkets AUD payment rails are unaffected and open for business.— Caroline Bowler (@CaroBowler) May 18, 2023
“Nothing's been alerted to me that there are any concerns with BTC Markets,” she said. “We are accountable to them on a monthly basis and have been for a sizable period of time.”
Jonathon Miller, Kraken Australia’s managing director, told Cointelegraph there are “only a couple” of payment providers in the local market “that are crypto-friendly, and we’ve got a really strong relationship with them.”
“It’s very unfortunate to see a business in a position where they have to cut their client’s access overnight,” he said.
“It’s not great for the end-user, it’s not great for the industry, but it seems like it’s part of a broader story with what’s been happening with that enterprise for some time.”
Jason Titman, Swyftx’s chief operating officer, told Cointelegraph it works “closely behind the scenes with Aussie banks, federal and state law enforcement agencies” on frauds and scams and noted the exchanges withdrawals and deposits are performing as usual.
Some of the executives noted a significant uptick in the users, downloads and registrations on their platforms as Binance users seemingly hunt for alternative exchanges with Australian dollar payment ramps.
Debanking risks still lurk
Despite assurances, some of the execs noted the regulatory environment in Australia for crypto gives way to more possible debanking situations taking place.
“The risk of debanking is ever-present irrespective of the latest news from Binance,” Bowler said, adding:
“That is reflective of the regulatory environment that we operate in or in this case, the absence of a regulatory environment.”
Bowler added this is the reason Australia needs “a proper regulatory framework,” which she believes will reassure financial institutions about doing business with crypto exchanges.
Such laws “can have a degree of comfort about the standards which they’re operating to,” she added.
Binance Australia says banking disrupted after payment provider Cuscal cuts off service.— The Roundtable Show (@RoundtableSpace) May 18, 2023
Deposits & withdrawals are stopped, this comes after Australia’a second largest bank, Westpac, banned customers from transacting with Binance.
What is happening to crypto in Australia? pic.twitter.com/wG6UKyrCU4
Currently, the local industry has a “very limited pool” of payments providers, as exchanges have been “unable to get access to banking rails,” according to Bowler.
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Kraken’s Miller said the problem isn’t “necessarily a local issue,” pointing to the bank collapses in the United States and the perceived debanking of crypto companies that followed but added it’s “certainly been a problem in Australia for a long time.”
“There have been other people and industry bodies have been quite vocal about the relationship being relatively strained between crypto businesses and banking in Australia, and that's not new.”
He added Kraken already had or was engaged in obtaining crypto-related licenses in “multiple jurisdictions,” such as Canada, Europe and the United Kingdom, which have various legal regimes for crypto.
“Australia is kind of sitting here with no regime at all,” he said.
Binance Australia loses AUD @MarkDiStef— Daniel Pickering (@the_djp_) May 18, 2023
In one stroke of a bankers pen, the largest exchange in the country can no longer operate as normal.
Long term this makes no difference to bitcoin and ensures that the Australian dollar is slightly less useful than it was last week. https://t.co/aH11pE4Rth
Swyftx’s Titman said in the long term, “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.”
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Update (May 19, 10:15 am UTC): This article has been updated to include further comments from Swyftx.