The Australian Prudential Regulation Authority (APRA) has started asking local banks to declare their exposure to crypto ventures and startups in the wake of the ongoing banking crisis, the Australian Financial Review (AFR) reported on Tuesday. Australian startup founders did not welcome the move, arguing it could limit their access to banking services.
Australia Cracks Down on Crypto and Startup Industries as Another Major Bank Falls Over
Australia’s prudential regulator is instructing banks to report their exposures to crypto firms and startups following the collapse of the Silicon Valley Bank (SVB) and the resulting turmoil in the banking sector. According to AFR, the APRA had asked local banks to improve their reports on crypto assets and provide daily updates to the regulator to gain more insight into potential vulnerabilities in the system.
The unexpected SVB implosion triggered a series of collapses in the sector, with Silvergate Capital and Signature Bank falling prey to one of the most extensive banking crises in history. More recently, Credit Suisse, one of the systematically important banks, was acquired by Swiss rival UBS in a bailout deal to prevent broader market panic.
The deal, orchestrated by the Swiss government, will see UBS pay 3 billion Swiss francs ($3.25 billion) for its longtime rival Credit Suisse, roughly 60% less than the bank’s valuation at Friday’s close. While the acquisition could provide some unique value opportunities for UBS investors, the deal represents an “emergency rescue” above all, said UBS chairman Colm Kelleher.
Startup Founders Worried About Their Access to Banking Services
Given their financial soundness, there are no indications that the latest regulatory crackdown could trigger a flight of deposits in Australian banks. However, some are worried that the intense oversight and compliance activity related to startups and crypto ventures could limit their ability to access banking services.
“The growth of digital economy businesses is at risk if start-ups can’t get banking services and all of the growth and subsequent efficiencies, productivity, and job growth that go alongside that.”
– said Peter Cook, CEO of payment services provider Novatti.
One startup founder said Australian startups were already finding it difficult to access banking services in the country. They voiced their concerns that it will likely “get a whole lot tougher due to a banking crisis that has absolutely nothing to do with us.” This is also true for crypto firms, particularly after the collapses of Signature and Silvergate banks, which were viewed as pillars of the crypto banking ecosystem.
This article originally appeared on The Tokenist
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