Bitcoin discount emerges on Binance Australia ahead of payment cutoff
BITCOIN and other digital tokens were trading at a discount on Binance Australia versus rival exchanges in the country, with the platform set to be cut off from a key local currency withdrawal route.
As at 1.10 pm on Tuesday (May 30), Bitcoin was trading at A$34,863 (S$30,849). CryptoCompare data showed that this was about A$7,516 lower than the average price on other platforms including Independent Reserve and CoinJar.
Outside Australia, Bitcoin was quoted at US$27,790 on exchanges such as Bitstamp..
Discounts of about 20 per cent were also evident for tokens such as Ether and Solana.
From 5 pm on Thursday, Binance Australia users will not be able to withdraw Australian dollars to their bank accounts using the nation’s popular PayID service, the platform said.
Earlier this month, the platform lost access to some Australian dollar deposit services.
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“Bitcoin/AUD is trading at a material discount to Bitcoin/USD, as Australian clients are willing to sell Bitcoin at a discount so they can withdraw the AUD before the deadline,” said Richard Galvin, co-founder at fund manager Digital Asset Capital Management.
On May 18, Binance Australia said it could no longer offer Australian dollar deposit services due to a decision by third-party service provider Cuscal.
The payment solutions company said its primary focus is on “protecting Australians from financial crimes and scams” and that it was not commenting on other parties.
On the same day, Westpac Banking – one of Australia’s largest financial institutions – said it had begun trialling new customer protections for some crypto payments to reduce “scam losses”.
A Binance Australia spokesperson said on Tuesday that Australian dollar balances can be converted into the Tether stablecoin to “facilitate withdrawals and trading activities” after Thursday.
“Due to the recent removal of fiat on-ramp services by our payment processor’s banking partner, some Australian users have been withdrawing their AUD holdings from the platform in advance of the off-ramp closure Jun 1,” the spokesperson said.
“As a result, AUD pairs have experienced less liquidity which has impacted their pricing. We will be delisting remaining AUD pairs in line with the closure of fiat off ramp services.”
The spokesperson added that Binance is “working hard to find an alternative provider to continue offering AUD deposits and withdrawals” to its users.
Binance is the largest exchange in the controversial digital-asset sector. Its global business and a US platform are the subject of a web of probes.
Last month, the Australian Securities and Investments Commission cancelled Binance’s licence for its derivatives business in the country, amid a review of the group’s local operations.
And earlier this year, the US Commodity Futures Trading Commission sued Binance and its chief executive officer Changpeng “CZ” Zhao, for allegedly violating derivatives regulations. It also accused the firm of having “sham” compliance procedures. Binance has called the lawsuit “unexpected and disappointing”.
The company initially did business solely in cryptocurrencies, enabling it to avoid the global banking system.
But as it attracted more customers and hired more employees, its need for conventional bank accounts grew. It used Silvergate Bank, the US lender that collapsed in March. In the same month, New York’s chief financial regulator took over another crypto-friendly bank, Signature Bank, where Binance was also a client.
Binance has had limited success obtaining bank accounts for its small units. Most major banks turned the exchange down due to compliance concerns over crypto companies’ source of funds, according to company messages and former executives, Reuters reported.
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