In the middle of the night, Binance Australia’s team faced unexpected debanking
Binance Australia’s regional manager, Ben Rose, revealed that the exchange’s team received a sudden notification, with no prior warning or consultation, stating that they would be “cut off” from Australia’s banking system. This incident had a significant impact on approximately 1 million customers based in Australia.
Suspension of Dollar Services and Banking Cut-Off
On May 18, Binance Australia announced the suspension of its dollar services after its payments provider, Zepto, was instructed by Cuscal (Zepto’s partner banking and payments provider) to cease support for Binance. The exchange was given 24 hours’ notice of debanking at 11:30 pm, which was later reduced to 12 hours, ultimately leading to the cutoff of their banking services.
Unclear Reasons and Concerns
Ben Rose mentioned that the reasons provided for the debanking were not entirely clear and did not present a positive image in the media. While a Cuscal spokesperson declined to comment on Binance Australia-related matters, they referenced crypto-related “scams and fraud” as a potential factor.
The limited information initially caused worry among Binance customers. However, this sentiment changed as it became evident that the wider local crypto industry was also affected by these banking changes.
Implications for the Crypto Industry
The same day Cuscal offboarded Binance, Westpac, one of Australia’s Big Four banks, announced trials to block payments to crypto exchanges. Additionally, Commonwealth Bank, another major Australian bank, initiated similar measures against crypto-related payments just a month later.
Rose emphasized that Binance Australia experienced some decline in user numbers and engagement following the debanking incident. While discussions regarding an alternate third-party payments provider were ongoing, Rose refrained from providing additional details.
The Dominance of Cuscal in the Crypto Industry
Ben Rose acknowledged the significance of Cuscal as a major player in the industry, noting that they “bank the majority of this industry.” Several crypto-friendly payments providers in Australia, such as Monoova, Zai, and Zepto, rely on Cuscal’s partnership to access the local banking system. Peer crypto exchanges, including BTC Markets, Kraken Australia, CoinJar, and Independent Reserve, also utilize Cuscal-backed payment rails.
Moving Forward with Regulation and Licensing
Rose emphasized the importance of collaboration with regulators and the banking sector, suggesting the implementation of “sensible licensing” for the crypto industry. He expressed the need for Australia to take swift action, as other jurisdictions worldwide are already progressing in this area. Rose believes that Australia has a window of opportunity but also recognizes the risks associated with delayed licensing initiatives.
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