In brief
- An Australian crypto trader is reportedly suing Australian banks for cutting him off.
- Banks often don't like dealing with crypto, which is volatile and largely unregulated.
- Recently, some crypto companies have become banks.
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An Australian crypto entrepreneur is reportedly suing two banks for booting his cryptocurrency exchange business off their ledgers.
As reported by the Australian Financial Review, Allan Flynn has filed a lawsuit against two of Australia’s commercial banks, ANZ and Westpac, for discriminating against him for his crypto business and cutting him off with almost no warning.
Flynn reportedly runs a Bitcoin OTC desk that services 450 customers. The AFR said that the banks rejected Flynn because they didn’t like the sound of Bitcoin. And this isn’t the first time: apparently, at least 20 of Flynn’s bank accounts have been closed for the past three years.
“How am I supposed to run a lawful business if I can’t get a bank account?” Flynn reportedly told the AFR.
It’s a tricky one for the crypto industry. Just last week, crypto influencers defended Twitter’s right to boot President Donald off the platform, citing the freedom of its terms of service.
But it’s no fun when it happens to one of their own.
Crypto has always had a tough time with banks. Lots of banks have long refused to let their customers transfer money from exchanges.
And up until March of last year, India had banned banks from servicing crypto exchanges. The lifting of the ban meant that Indians could directly interact with crypto exchanges rather than sourcing their Bitcoin from elsewhere.
Such “crypto-phobia” is partly what caused Bitfinex and Tether to seek banking services from Panamanian "shadow bank" Crypto Capital. The companies later accused Crypto Capital of stealing their money.
But, within the last year, US banks have begun to warm up to crypto. JP Morgan now supplies Coinbase and Gemini with its services.
Occasionally, crypto gets to ban the banks. In June 2020, Paxful banned trading from the Bank of Venezuela, citing US sanctions.
And in the US, some crypto companies have become banks. Anchorage, a crypto platform for institutional investors, this month became the US’s first federally chartered digital asset bank. And last year, Kraken was the first crypto company to become a crypto bank—albeit operating under a state charter.