Australia’s approach to cryptocurrency banking faces renewed scrutiny after Coinbase accused major lenders of blocking access to essential financial services. In a submission to a federal inquiry on digital wallets and payments, the exchange argued that debanking now shapes the market.
Consequently, it believes innovation suffers as compliant crypto and fintech firms struggle to operate. The company described an environment where account closures, rejected applications, and transfer limits have become routine. Hence, Coinbase warned that the pattern risks weakening competition and pushing activity outside regulated channels.
Moreover, the exchange said banks often justify restrictions through anti-money laundering and scam concerns. However, Coinbase maintained that a blanket approach harms legitimate businesses alongside bad actors.
Significantly, the company will soon face stricter local compliance rules and licensing requirements. It argued that cooperation, not exclusion, offers a safer path for consumers and the economy.
Policy Gaps and Regulatory Friction
Australia already examined debanking once before. A 2021 Senate inquiry highlighted the problem across fintech and digital asset firms. Additionally, lawmakers recommended safeguards to prevent banks from denying services to compliant companies.
Coinbase told the inquiry that authorities accepted those ideas in principle but failed to implement them. Consequently, the exchange sees a widening gap between policy intent and market reality.
Besides regulatory delays, Coinbase pointed to mixed signals from the financial sector. Weeks earlier, its chief executive Brian Armstrong said senior banking figures showed interest in crypto involvement. Hence, the exchange argued that operational barriers contradict private discussions about adoption and innovation.
Banks Defend Risk Controls
Australian banks strongly rejected claims of arbitrary behavior. According to industry representatives, scam losses drive tighter controls rather than hostility toward technology.
Data cited by Australian Financial Review showed Australians lost at least AU$330 million to crypto scams last year. Consequently, banks say they must act decisively to protect customers.
The Australian Banking Association echoed that position. Its chief executive Simon Birmingham said banks carry heavy penalties for compliance failures. Hence, he argued crypto platforms should strengthen controls instead of seeking exceptions.
Business Impact and Consumer Concerns
However, entrepreneurs continue to report disruption. Longtime investor Fred Schebesta described widespread harm to compliant firms.
Additionally, he cited retail transfer caps and customer interventions that forced rushed crypto sales. Consequently, critics argue such measures erode trust and discourage transparent participation.
