Despite all the talk about cryptocurrencies getting the attention they deserve, there is still significant discrimination from companies in the traditional financial sector.
The topic is back in the foreground after an Australian cryptocurrency exchange owner recently took two banks to court.
20 banks closed their accounts
According to a recent Australian financial review report, Allan Flynn, a local Bitcoin trader and owner of an exchange, sued ANZ and Westpac – two commercial banks in the country – for systematic discrimination. Flynn was reportedly the victim of discriminatory practices by both banks, knowing several account closings that affected him and his business.
Speaking to the news source, Flynn explained that as many as 20 banks across the country have closed accounts managed by his exchange in the past three years. This despite his exchange having obtained approval to work from the Australian Transaction Reports and Analysis Center (AUSTRAC)
Flynn had filed a complaint with the Australian Financial Complaints Authority last year against Westpac after another account closure.
However, the regulator ruled that the bank had acted in accordance with its terms and conditions. At the time, Westpac offered Flynn a paltry $ 250 in compensation for the sudden account closure. Even that, Flynn claimed in his recent complaint that he had not yet received the funds.
The trader filed his formal complaint with the Australian Civil and Administrative Court. The proceedings will begin in March, with Flynn seeking to receive A $ 250,000 (approximately $ 192,000) in restitution.
Discrimination against crypto companies
Flynn’s problem is one that many players in the global crypto space face. As the sector continues to grow in importance, several banks have refused to serve them due to arbitrary policy or orders from financial regulators.
Considering how much stock exchanges and corporations depend on cash and banking services, this discrimination effectively stifles the growth of a promising industry.
India experienced a similar event last year. Banks have not been allowed to provide services to crypto companies since 2018, following a directive from the Reserve Bank of India (RBI).
However, in a landmark case last March, the Supreme Court of India reversed ban, effectively allowing crypto companies to operate freely and without having to look over their shoulders.
Even that, banks are still afraid to provide services to crypto companies. Shortly after the Supreme Court ruling, Mohammed Dainish, a local FinTech lawyer, filed a complaint representation with the RBI against the “arbitrary refusal” of certain national banks to provide services to support the sale or purchase of digital assets.
The problem has its roots in the RIB’s constant refusal to support cryptocurrencies beyond recognition of the Supreme Court ruling. Although the agency denied it, some reported that it was working on a separate and more sweeping crypto ban.