At the Australian Blockchain Week panel discussion, executives from leading Australian banks shed light on the reasons for the implementation of constraints on payments to domestic cryptocurrency exchanges.
The predicament of cryptocurrency banking in Australia is projected to persist, as neither the government nor the major banks display any signs of easing their stand against scams involving cryptocurrency.
During the June 26 panel discussion at Australian Blockchain Week, Sophie Gilder, the Blockchain and Digital Assets Managing Director at Commonwealth Bank (CBA), explained the bank’s stance on restrictions towards crypto exchange payments. These measures were put in place in response to the surging rate of scams involving cryptocurrency.
Gilder emphasized, “One in every three dollars scammed from Australians is linked to crypto. It’s the most effective measure we have to mitigate this impact on our customers.”
Further supporting this view, ANZ’s Banking Services Portfolio Lead, Nigel Dobson, cited data from the Australian Financial Crimes Exchange that suggests the percentage might be closer to 40%.
Following Westpac’s lead, CBA enforced pauses, limits, and complete blocks on specific payments to cryptocurrency exchanges on June 8, citing the rising risk of investment scams. ANZ and NAB, Australia’s other two major banks, haven’t yet indicated if they plan to introduce similar restrictions.
A Treasury official affirmed that these actions are at the discretion of the banks, adding that both the government and banks concur that the current levels of cryptocurrency scams are intolerably high.
Trevor Power, the Australian Treasury Assistant Secretary, stated, “From the government’s perspective, more needs to be invested in curbing scams. This responsibility is shared by the government, banks, and other financial entities in a collective effort to maintain trust in the system.”
Crypto Industry Not the Target
However, Gilder clarified that CBA’s steps are not intended to impede the crypto industry and do not necessarily imply any misconduct by centralized exchanges.
She said, “The action is not industry-specific. It is based on data, behavior patterns, and identifying malicious entities. We already do this with traditional bank accounts. So in that sense, there are clear parallels to the work we already undertake.”
As Blockchain Australia’s chair and Piper Alderman’s digital asset lawyer, Michael Bacina, hopes for greater cooperation between banks and the industry to jointly combat the issue of scams. He stressed the importance of understanding the data in more detail and called for the collaborative efforts of businesses in the blockchain and crypto industry with banks and payment providers to minimize scams.
The actions of the banks have been criticized by Australian crypto exchange customers. However, Aaron Lane, an Australian lawyer and senior research fellow at the RMIT Blockchain Innovation Hub, defended the banks’ approach.
“Banks and other financial institutions face increasing pressure to address the escalating issue of cryptocurrency-related scams. Implementing time delays, declining transactions, and imposing deposit limits are all mechanisms for banks to regain control and reduce their legal and regulatory risks.”
While such measures may not be ideal for Australian crypto exchanges and their customers, Lane believes a “risk-based approach is superior to outright debanking.”
According to the Australian Competition and Consumer Commission, Australians lost 221.3 million Australian dollars ($148.3 million) to investment scams using cryptocurrency as a payment method in 2022 — a massive 162.4% increase from 2021.
Power concluded that cryptocurrency remains a “significant vector” for scams in Australia, which necessitates both banks and the government to tighten their control over the sector.