Australiaโs cryptocurrency industry banking woes will likely continue, with the government and major banks signaling no intention to back down against scams that โtouchโ crypto.
During a panel at the Australian Blockchain Week on June 26, Sophie Gilder, managing director of blockchain and digital assets at Commonwealth Bank (CBA) shed light on the bank’s restrictions on crypto exchange payments, noting it was put in place after seeing an alarming rate of scams that ended up involving cryptocurrency.
โOne in three of the dollars that are scammed from Australians touch crypto, one in three. So it’s the single largest lever that we have to reduce this impact on our customers,โ she said.
Nigel Dobson, banking services portfolio lead at ANZ referred to data from the Australian Financial Crimes Exchange which suggests the figures may be even higher at 40%.
On June 8, CBA followed Westpacโs lead in imposing pauses, limits and outright blocks on certain payments to cryptocurrency exchanges, both citing an increasing threat of investment scams. Australia’s other two major banks, the ANZ and NAB, have not yet indicated whether they would impose similar restrictions.
A Treasury official confirmed that the moves so far have come at the banks’ own โvolitionโ but that both the banks and the government have a โshared viewโ that cryptocurrency scams are โunacceptably highโ at the moment.
โFrom the government’s point of view, [they] need to invest more in reducing scams, and thatโs the government, but it’s also banks, other people in the financial system have to work together to reduce scams to maintain trust in the system,” said Trevor Power, the Australian Treasury assistant secretary.
Not an attack on crypto
However, Gilder clarified that CBAโs measures werenโt made to attack the industry and doesnโt necessarily reflect any wrongdoing by centralized exchanges.
โIt’s not industry specific. It’s based on data, patterns of behavior and identifying bad actors. So we do this with normal bank accounts already. So in that way, there’s definitely parallels to work that we already do.โ
Gilder was also bullish about blockchain technology, noting that nearly every bank has established a digital assets team โ a sign that โbanks recognizeโ the need to understand the space, she said.
Digital asset lawyer Michael Bacina of Piper Alderman and chair of Blockchain Australia, who also moderated the session,ย is hoping for closer collaboration between the banks and the industry to tackle the issue of scams together.ย
“The banks have put forward concerning figures of scams touching crypto as a payment rail in some way.”
“Itโs important to understand that data in more detail, but what is clear is that businesses in the blockchain and the crypto industry need to work collaboratively with banks and payment providers to ensure that scams are reduced as much as possible,” he added.
Reporting from @jessicasier @FinancialReview that @CommBank have banned AUD transfers to โhigh-riskโ crypto exchanges & limited transactions with others to $10k per month, with a 24 hr delay. $700k per day leaves CBA as scammed money heading to crypto. Banks & the crypto industryโฆ
โ Caroline Bowler (@CaroBowler) June 8, 2023
The bankโs decision has continued to meetย criticism from Australian crypto exchange customers. Australian lawyer and senior research fellow at the RMIT Blockchain Innovation Hub Aaron Lane has defended the banks’ actions, however.
โBanks and other financial institutions are under increasing pressure to tackle the growing problem of scams involving cryptocurrency. Imposing time delays, declining transactions, and placing deposit limits are all mechanisms for banks to retake control and limit their legal and regulatory risks.โ
While these measures โmay not be idealโ for Australian-based crypto exchanges and their customers, Lane said that a โrisk-based approach is better than outright debanking.โ
Related: Aussies revealed as prime targets of Israel crypto scam syndicate
According to the Australian Competition and Consumer Commission, Australians lost 221.3 million Australian dollars ($148.3 million) from investment scams where crypto was used as the payment method in 2022 โ a massive 162.4% increase from 2021.
Power concluded that crypto remain a โsignificant vectorโ for scams in Australia, which calls on both banks and the government to clamp down on the sector.
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