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.
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 BitcoinBitcoin. 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.
Stablecoin Issuers Must 'Come Out of the Shadows,' Says US Treasury
The Office of the Comptroller of the Currency’s chief economist wants stablecoin issuers to be regulated. And for their own good. Charles Calomiris, who oversees the OCC's Economics Department, made the remarks in a new paper, “Chartering the FinTech Future.” In it, he argues that the “traditional chartered banking system wallows in a state of unprofitability and inefficiency” and that new fintech institutions are coming into existence, and proving useful on leading us “down a path of substanti...
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.