Australia’s major banks are tightening controls on crypto linked businesses to meet tough anti money laundering rules and curb scams, but this push to reduce risk appears likely to restrict competition, innovation and trust in the broader financial system.
Australia’s payments sector is in the middle of a reset, with regulators and parliament reviewing how digital wallets and payment innovation should work in a market where more people are moving money via apps and crypto platforms. A previous Senate inquiry into financial technology found that many fintechs were losing access to banking services and the government agreed in principle to reforms aimed at stopping legitimate operators from being quietly cut off. Several years on, global exchanges and local fintechs argue that little has changed in practice and that losing bank accounts has shifted from being an occasional problem to a recurring feature of doing crypto business in Australia.
Large financial institutions say they are acting under strict legal and regulatory expectations and point to rising fraud, reputational concerns and responsibilities under anti money laundering and counter terrorism financing frameworks, especially as Australians reportedly lost more than $330 million to crypto related scams in the year to 31 December. Industry groups for the banks stress that institutions can face severe penalties if they fail to manage high risk customers properly and argue that digital asset platforms must meet the same compliance standards as other financial services providers. At the same time, crypto firms that operate globally, work with major international banks and plan to hold local financial services licences insist that widespread account closures, blocked transfers and low transaction limits, such as monthly caps of around $10,000 to some exchanges, are hitting compliant businesses and everyday investors rather than only suspicious operators.
Regulators have previously urged banks to improve transparency and fairness around debanking and the Council of Financial Regulators set out expectations to reduce unexplained account closures, but progress appears uneven and often hard to measure. Treasury has described much of the evidence so far as anecdotal, which makes targeted policy design more difficult, yet it also acknowledges that leaving the issue unresolved is likely to weaken competition, slow down fintech and blockchain innovation and push some activity into less visible channels. With tighter anti money laundering obligations for digital asset platforms starting from 31 March and more consumers reporting blocked or delayed crypto transfers, Australia appears to be entering a period in which the balance between financial crime prevention and open access to banking will shape how attractive the country is for crypto, payments and broader digital finance investment.
