Crypto investors hoping to get their money quickly through Binance Australia will have to wait a day or two longer after the crypto exchange said it has been forced to stop offering Australian dollar PayID deposits for account holders following “a decision from our third party payment service provider”.
Binance’s banking comes as Westpac cracks down on scams, with a specific focus on cryptocurrency exchanges. Westpac says it is not the third party involved.
The change also affects Binance Australia’s wire transfer withdrawals, with the exchange saying it will notify users on the timeline when confirmed. They will turn into PayID deposits effective immediately.
“We are working hard to find an alternative provider to continue offering AUD deposits and withdrawals to our users,” Binance said in a tweet.
The exchange said customers can still buy and sell crypto using a credit or debit card and the Binance P2P marketplace.
“You can rest assured that your funds are safe through the Secure Asset Fund for Users (SAFU), an insurance fund that provides protection to Binance users and their funds in case of extreme situations,” said Binance.
De-banking is when a bank refuses or withdraws banking services to a customer. It has been a big deal for fintechs in Australia, especially the crypto sector. In October last year, the The Board of Financial Supervisors has released a document on possible policy responses to address the problem. The paper was prepared in response to the final report of the Senate Select Committee on Australia as a Technology and Financial Centre.
The federal government has yet to respond to the recommendations in the financial regulators’ document.
We regret to inform you that with immediate effect we are unable to facilitate PayID AUD deposits for Binance users due to a decision made by our third party payment service provider. We understand from our third party payment service provider that Bank…
— Binance Australia (@Binance_AUS) May 18, 2023
The latest trade issues at Binance come just 10 days after the world’s largest crypto exchange was forced to temporarily shut down bitcoin withdrawals “because of the large number of pending transactions.”
On May 8, Binance explained that the break was because “our fixed fees did not anticipate the recent increase in $BTC network gas fees.”
They replaced ongoing bitcoin withdrawal transactions with a higher fee to ensure they would be picked up by mining pools.
“To avoid a similar recurrence in the future, our rates have been adjusted. We will continue to monitor activity in the chain and make adjustments as necessary,” said Binance.
“This is a learning opportunity for us and we will do our best to prevent this from happening again.”
Last month, corporate regulator ASIC canceled the Australian Financial Services License (AFSL) of Oztures Trading Pty Ltd, trading as Binance Australia Derivatives (Binance). The cancellation took effect April 14, requiring Binance customers to close all existing derivative positions by April 21
ASIC has conducted a focused assessment of Binance’s financial services providers in Australia, including the classification of retail and wholesale customers. In late March, ASIC issued a hearing to consider whether ASIC should cancel or suspend Oztures Trading Pty Ltd’s AFS license.
ASIC President Joe Longo said it was important for AFS licensees to classify retail and wholesale customers in accordance with the law.
“Retail customers who trade crypto derivatives are afforded important rights and consumer protections under Australian financial services law, including access to third-party dispute resolution through the Australian Financial Complaints Authority,” he said.
“Our focused assessment of these matters is ongoing, including focusing on the extent of harm to consumers.”
Meanwhile, big four bank Westpac revealed today that it has begun testing new client protections for some cryptocurrency payments to mitigate scam losses.
Scott Collary, Westpac’s customer service and technology chief, said a phased trial of the new protection blocks will be rolled out in the coming weeks.
“Digital exchanges play a legitimate role in the financial ecosystem. But since the rise of digital currencies, we’ve noticed that scammers are increasingly using foreign exchanges,” Collary said.
“Often our clients only find out they have been scammed after the money has left the country, making recovery extremely difficult. The trial of our new security measures will better protect customers against scams.”
The bank said the latest data shows that investment scams account for about half of all scam losses, with a third of all scam payments being made directly to a cryptocurrency exchange.
Earlier this week, Westpac was one of 17 banks to sign up for a new anti-fraud platform that has already halved bank-to-bank scam payments in early trials, freezing wire transfers during early detection.
The Australian Banking Association’s Fraud Reporting Exchange (FRX) platform enables reporting of scam payments in near real-time, increasing the likelihood that funds can be frozen and returned to customers.
The new Fraud Reporting Exchange (FRX) platform will enable faster and more targeted communications to help banks stop and recover as much money as possible when customers have paid fraudsters.
The FRX is owned and operated by the Australian Financial Crimes Exchange (AFCX), an independent body established and funded by Australian banks.
ABA CEO Anna Bligh said FRX means banks are now better able to collectively identify funds that have been fraudulently transferred.
“Since every minute can be critical in disrupting scams, the launch of the FRX is an important development,” she said.
“It means that more and more scammers are hitting a wall and it adds to the panoply of ongoing anti-scam initiatives.
Australians lost more than $3 billion to scams last year.