Binance Australia has been facing an unexpected disconnection from the local banking system without getting any prior notice or consultation for such action. Ben Rose, the head of the exchange, stated that they were given a mere 12-hour notice before being cut off from the banking system.
The suspension of Australian dollar services by Binance Australia on May 18, 2023, occurred amidst increased regulatory scrutiny on crypto exchanges. This suspension came into effect after their payment provider, Zepto, was instructed by Cuscal, Zepto’s partner payments and banking provider, to cease support for Binance. A Cuscal spokesperson declined to comment on this step but hinted that it is related to crypto-related scams and fraud.
The sudden disconnection from Cuscal raised concerns as the Australian crypto industry has heavily relied on crypto-friendly payment providers like Zai, Monoova, and Zepto, all of which are partnered with Cuscal to access the local banking system. It remains unclear how Binance Australia would proceed, as it is uncertain which alternative third-party payment provider they could turn to in such a scenario.
According to a recent tweet, Binance Australia participated in Day 1 of Blockchain Week on June 26. Binance’s regional manager, Ben Rose, informed the audience that the de-banking has affected approximately 1 million customers in Australia.
It was great to be part of Day 1 of Blockchain Week, where we're proud to partner with @BlockchainAUS
— Binance Australia (@Binance_AUS) June 26, 2023
Our ANZ GM @mrbenrose spoke about Binance's long-term commitment to the Australian market and the need to collaborate to grow the crypto industry at this crucial time.
He also… pic.twitter.com/esP5NeUvmL
Rose mentioned that the exchange received a 24-hour notice of de-banking at 11:30 pm, which was later reduced to only 12 hours before the banking services were abruptly cut off. Initially, the limited information surrounding the issue caused concern among Binance customers. However, it was later clarified that the problem was limited to the wider Australian crypto industry impacted by these banking changes.
The cut-off from the local banking system poses a setback for Binance. The move became concerning in regard to its competitive edge, especially when its counterparts such as Kraken Australia, Independent Reserve, and BTC Markets still enjoy the backing of Cuscal.
While the unprecedented disconnection from the local banking system presents significant challenges, Rose believes that there is still an opportunity. However, he also acknowledged the risk if the exchange fails to swiftly progress with licensing.
Although Ben Rose stated that losing access to the local banking system doesn’t have a significant impact on the business, he emphasized the importance of implementing “sensible licensing” within the industry. In the same vein, Binance recently abandoned its registration plans in Austria due to regulatory pressure. In addition, it has already scaled back its plans in the United Kingdom, Belgium, Cyprus, and the Netherlands.
