Binance Australia, one of the leading cryptocurrency exchanges in the country, claims to have received only 12 hours’ notice before being “debanked”. The move has sent shockwaves throughout the cryptocurrency community and raised concerns about the relationship between traditional financial institutions and digital asset exchanges.
According to Binance Australia head Ben Rose, the exchange received less than 24 hours’ notice from its payments partner before being abruptly severed from the local banking system in May.
Unexpected Termination of Banking Services Throws Binance Australia into Disarray
In an unexpected turn of events, Binance Australia’s team was informed during the late night hours that they would be disconnected from Australia’s banking system. According to Ben Rose, the regional manager of the exchange, there was no prior warning, consultation, or opportunity for recourse in this matter.
On May 18th, Binance Australia announced that its dollar services had been suspended. This decision came after the payments provider Zepto, which is partnered with Cuscal, the banking and payments provider, was instructed to cease support for Binance. During the Australian Blockchain Week on June 26th, Rose revealed to the audience that the action significantly impacted approximately 1 million customers in Australia.
“We received 24 hours’ notice of debanking at 11:30 pm in the evening, that was later turned into 12 hours, and so we had our banking cut off.”
Lack of Clarity and Concerns About Crypto-Related Issues Surround Binance Australia
Rose expressed that the reasons provided for the termination were not fully transparent and did not present a favorable image in the media. Previously, a spokesperson from Cuscal declined to comment on matters related to Binance Australia when approached by Cointelegraph but did reference concerns about crypto-related scams and fraud.
Initially, the limited information caused concern among Binance customers. However, as the situation unfolded, it became evident that it was not just Binance, but the entire local crypto industry that was affected by these banking changes. According to Rose, the tone among customers shifted rapidly once this broader impact was realized. On the day that Cuscal offboarded Binance, Westpac, one of Australia’s “Big Four” banks, announced trials to block payments to crypto exchanges. Shortly thereafter, Commonwealth Bank, another major Australian bank, implemented similar measures to block crypto-related payments.
Reliance on Cuscal: Central Role of Payments Providers in Australia’s Crypto Industry
According to Rose, although other providers are available, it is acknowledged that Cuscal primarily serves most of the industry. The crypto industry in Australia has traditionally relied on payments providers with crypto-friendly policies, such as Monoova, Zai, and Zepto, all of which are partnered with Cuscal to access the local banking system.
Binance’s peer crypto exchanges, including BTC Markets, Kraken Australia, CoinJar, Independent Reserve, and numerous other fintech firms involved in the crypto space, also utilize payment rails supported by Cuscal.
During the event, Rose asserted that the loss of access to their banking partner had not significantly affected the business. He mentioned that Binance users have been utilizing alternative methods, most likely referring to purchases and deposits made through bank cards, which are still supported on the platform.
Rose emphasized the importance of collaboration with regulators and the banking sector, highlighting the potential implementation of “sensible licensing” for the industry. He urged Australia to take swift action, as other jurisdictions worldwide are already progressing in this regard. “We believe it is crucial for Australia to make timely advancements because jurisdictions across the globe are now making strides,” Rose commented.
He further added, “We have a window as a country and we think there’s an opportunity, but there’s also a risk if we don’t move on licensing relatively quickly.”
As Binance Australia got suddenly debanked with only 12 hours notice has raised concerns about the relationship between traditional financial institutions and cryptocurrency exchanges. The impact on approximately 1 million customers and reliance on payment providers like Cuscal has highlighted the vulnerabilities the crypto industry faces. Binance Australia remains committed to finding alternative banking solutions and calls for regulatory clarity and collaboration to foster responsible innovation. The incident serves as a reminder of the need for a framework that addresses the concerns of regulators and banks while promoting innovation in the cryptocurrency space.
Also Read: NEAR Foundation Partners with Alibaba Cloud to Propel Web3 Growth in Asia.
