Welcome, and thank you for being part of the MyZucoins community! Dive into our daily crypto, finance and tech news summary to stay in the know.
Correction: A typo in yesterday’s newsletter for the line “…Zucoins public, beta, soft launch over a year ago” mentioned this date as Feb 2023—it was, of course, meant to be Feb 2022. My sincere apologies. 🙃
Crypto Exchanges Face Banking Headwinds Down Under
Binance Australia, a popular cryptocurrency exchange, has hit a roadblock. It has announced that it can no longer accept deposits in Australian dollars through bank transfers. Why? Its third-party payment service provider decided to pull the plug. Binance has assured users that it’s looking for a solution and in the meantime, users can still buy and sell cryptocurrencies using their credit or debit cards. Also, its P2P (peer-to-peer) marketplace is running as usual.
A key player in the banking industry, Westpac, decided to stop its customers from using their accounts to make payments to Binance, stating it wants to protect customers from scams. This move highlights the growing challenge cryptocurrency exchanges face in dealing with traditional banks. This is despite the fact most scams still happen via cash (fiat currency) or traditional banking systems.
The banking drama isn’t exclusive to Binance. Crypto.com, another big name in the crypto world, is also having a tough time. After some of its banking partners dropped out, the exchange is now at risk of losing its US dollar deposit functionality. This could leave many customers with only one expensive option for making deposits – using debit or credit cards.
In another twist, Binance Australia is under review by the Australian Securities and Investments Commission (ASIC) for a blunder. The exchange wrongly tagged 500 users as “wholesale investors,” leading to the closure of their derivative positions, which isn’t allowed for retail traders. Binance has promised to compensate the affected users.
Despite the turbulence, the value of Binance Coin (BNB) remains unaffected, a testament to the resilience of Binance’s cryptocurrency marketplace. All these events highlight the intricacies and challenges the crypto world faces as it continues to integrate with traditional banking systems. Read more here and here.
A possible reason that credit and debit cards are allowed, yet bank transfers ran into trouble, might be due to Visa’s and Mastercard’s network having more capable international compliance and fraud detection systems in place.
The ability of decentralised cryptocurrencies like Zucoins, to offer an alternative financial system that transcends traditional banking limitations becomes increasingly significant. By empowering individuals to transact and store value outside the purview of traditional banks, Zucoins and the Splitchain network present a compelling solution for those seeking greater financial independence and control over their assets.
Splitchain also has deep integration of two-factor authentication, proving the sender and receiver are both expecting the incoming transaction—a point that is enormously useful in compliance requirements and rare in the crypto industry. What’s more, most crime still operates using physical cash and traditional banking systems, despite their fraud measures (we’ll have more on this in an upcoming newsletter). However, crypto, the new kid on the block, needs to not only match these traditional forms of money, but improve on them. This has been one of Splitchain’s goals very early on.
Gambling – Regulation for Crypto? UK Trade Body Says No
UK-based trade body, CryptoUK and crypto exchange Kraken, have voiced opposition to the proposal of treating cryptocurrencies like gambling for regulatory purposes. A report from the UK Gov’s House of Commons Treasury Committee strongly recommended that unbacked crypto should be regulated akin to gambling, citing “significant” consumer risks, such as price volatility and lack of intrinsic value, proposing the principle of “same risk, same regulatory outcome.”
CryptoUK, in its response, emphasised the need for a more nuanced and bespoke approach to regulation, underlining the potential for inward investment and economic growth the crypto sector could bring to the UK. The organisation expressed concerns that an overly broad regulatory approach could deter businesses and potentially drive UK consumers to offshore crypto platforms, contradicting the objective of consumer protection through regulation.
Kraken’s response underscored their fundamental disagreement with the Treasury’s conclusion that crypto assets lack intrinsic value. They asserted that the committee’s proposal to regulate crypto assets as gambling products is misguided and inappropriate for UK consumers. They further argued that this approach overlooks the purpose and potential of the technology and pointed out that gambling protections do not provide the same safeguards as financial services regulations.
CryptoUK also drew attention to the potential fiscal implications of this regulatory stance. If crypto trading were treated as gambling, it would be exempt from capital gains tax, potentially denying the UK government significant tax revenue from gains made through the buying and selling of unbacked crypto assets. While the UK Treasury’s report did not specify the extent of the proposed “gambling” regulation, it recommended strong consumer protection regulations, Anti-Money Laundering measures, and controls against terrorism financing. Read more here. Read more here.
We’ve got a newsletter coming on this topic soon too. It’ll be on speculation vs productivity and the current issue with most blockchains in the crypto industry, that Splitchain is aiming to carefully address, step by step. It’s another one of those very tricky topics that the product team is navigating cautiously as more information comes out from these institutions. But, who knows, maybe Zucoins and Splitchain will need to be classified as a different kind of product if the focus on these kinds of proposed rigid UK regulations concern systems that mainly focus on “speculation”. These are the sorts of blanket industry claims that Splitchain has been putting a ton of effort into moving away from.
Revolut Expands in Australia with Business Offering and Potential Banking License
Crypto-friendly fintech (a finance-focused tech company), Revolut, is expanding its footprint in Australia. The London-based firm, renowned for its fiat payment and cryptocurrency services, has introduced international payments-focused business accounts for its Australian clients. The move comes amidst the firm’s efforts to secure a local banking license, adding credibility and consumers’ trust by adhering to higher regulatory standards.
Revolut’s CEO of the Australian unit, Matt Baxby, highlighted the company’s aim to provide an all-encompassing financial platform where banking license acquisition is a critical component. The pursuit of a banking license, as per Baxby, is aligned with their plan to deliver long-term value and meet the demand for their product range.
The newly launched multi-currency business accounts permit users to conduct up to AUD 75,000 worth of foreign currency exchange per month. Equipped with both physical and digital cards, real-time spending reports, and multiple user management capabilities, these accounts answer to the significant demand from Australian small and medium enterprises (SMEs) for enhanced international payment solutions. Revolut, with around 28 million total customers, of which 100,000 are business customers across Europe, expects substantial traction from these entities.
This expansion complements Revolut’s existing personal accounts in Australia, which offer traditional financial services, international transfers, as well as access to crypto, stock, and commodity investing. Recently, Revolut partnered with crypto tax solution provider Koinly to expedite tax calculations by enabling users to synchronise their transaction history. Read more here.
As the industry continues to evolve, cryptocurrencies like Zucoins align with the ethos of these crypto-friendly companies, providing individuals with greater control over their finances and embracing the benefits of decentralisation. It shows the industry continues to grow and expand with more opportunities, regardless of some headwinds.
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All the best,
Peter
MyZucoins