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Late into the evening, the Binance Australia team was unexpectedly informed of a swift withdrawal from the Australian banking system. The information came as a shock, devoid of any forewarning or discussion, according to the regional manager of the exchange.
The exchange declared a pause in its dollar services on May 18. This decision was necessitated by the order from Cuscal, the partner banking and payments provider of Zepto, to discontinue their support for Binance. Zepto has been Binance's payments provider thus far.
The sudden action affected nearly a million of Binance's Australian customers, regional manager Ben Rose revealed at Australian Blockchain Week on June 26. Initially, the scarcity of details alarmed Binance clients. However, it quickly dawned on them that this was part of wider changes in the local banking industry's approach to cryptocurrency, Rose explained.
The debanking of Binance coincided with Westpac, one of the Big Four banks in Australia, commencing trials to block payments to crypto exchanges. Following closely on Westpac's heels, Commonwealth Bank, another Australian banking giant, initiated similar trials within a month.
The Australian crypto sector has traditionally depended on crypto-friendly payment providers, namely Monoova, Zai, and Zepto, all of whom work in collaboration with Cuscal to gain access to the local banking network. Crypto exchanges like BTC Markets, Kraken Australia, CoinJar, and Independent Reserve also use Cuscal-backed payment rails, along with numerous other crypto-related fintech firms.
Rose assured his audience that the loss of their banking partner hadn't significantly impacted their operations. Instead, Binance users were transitioning to "other methods," likely referring to purchases and deposits using bank cards, which remain supported by the platform. He underscored the necessity of productive collaboration with regulators and banks and floated the idea of introducing "sensible licensing" for crypto.
