For all the talk about cryptocurrencies getting the mainstream attention they deserve, there is still a significant amount of discrimination from companies in the traditional finance sector.
The subject is in the forefront once more after an Australian crypto exchange owner dragged two banks to court recently.
20 Banks Closed His Accounts
According to a recent Australian Financial Review report, Allan Flynn, a local Bitcoin trader and exchange owner, has sued ANZ and Westpac – two commercial banks in the country – of systematic discrimination. Flynn has reportedly been the victim of discriminatory practices from both banks, experiencing several account shutdowns that have affected him and his business.
Speaking to the news source, Flynn explained that no less than 20 banks in the country had closed down accounts operated by his exchange in the past three years. This is despite his exchange getting approval to work from the Australian Transaction Reports and Analysis Centre (AUSTRAC)
Flynn had lodged a complaint with the Australian Financial Complaints Authority last year against Westpac after another account closure.
However, the regulator ruled that the bank acted following its stated terms and conditions. At the time, Westpac offered Flynn a paltry 250 AUD in restitution for sudden account closure. Even at that, Flynn claimed in his recent complaint that he was yet to receive the funds.
The trader has submitted his official complaint to the Australian Civil and Administrative Tribunal. Proceedings will begin in March, with Flynn looking to receive 250,000 Australian dollars (about $192,000) in restitutions.
Discrimination Against Crypto Firms
Flynn’s problem is one that many in the global crypto space face. While the industry continues to grow in prominence, several banks have refused to serve them due to some arbitrary policy or orders from financial regulators.
Considering how much exchanges and trading firms rely on liquidity and banking services, this discrimination is effectively stifling the growth of a promising industry.
India saw a similar occurrence last year. Banks had been restricted from providing services to crypto companies since 2018, following a directive from the Reserve Bank of India (RBI).
However, in a landmark case last March, the Supreme Court of India reversed the ban, effectively allowing crypto firms to operate freely and without having to look over their shoulders.
Even at that, banks remained scared of providing services to crypto firms. A short while after the Supreme Court’s ruling, Mohammed Dainish, a local FinTech lawyer, filed a representation with the RBI against the “arbitrary denial” of certain domestic banks to provide services to help with digital asset sales or purchases.
The problem has roots in the RIB’s consistent refusal to support cryptocurrencies beyond acknowledging the Supreme Court’s ruling. While the agency has denied it, some have reported that it was working on a separate, more sweeping crypto ban.