Australian Banks Refuse to Relent to Crypto Fraud
Australia’s cryptocurrency industry is likely to remain without access to banking services, as the government and major banks have indicated that they will not relent to fraudulent activities linked to crypto.
At the Australian Blockchain Week panel on June 26, Sophie Gilder, the managing director of blockchain and digital assets at Commonwealth Bank (CBA), discussed the bank’s regulations on crypto exchange payments. She explained that the restrictions were implemented due to the high rate of scams involving cryptocurrency.
“It has been estimated that one third of the dollars lost to scams in Australia involve cryptocurrency, making it the most influential factor in reducing the harm done to customers,” she stated.
Nigel Dobson, the head of the banking services portfolio at ANZ, cited data from the Australian Financial Crimes Exchange which indicated that the figures may even be as high as 40%.
Government and Banks Take Action to Curb Scams
On June 8, CBA joined Westpac in instituting pauses, limits, and prohibitions on certain payments to crypto exchanges, both citing the danger of fraudulent investments. ANZ and NAB, Australia’s other two major banks, have yet to reveal if they will implement comparable constraints.
A Treasury representative confirmed that the steps taken thus far have been initiated by the banks themselves, but both the banks and the government have a mutual understanding that the prevalence of cryptocurrency fraud is “unacceptably high” right now.
“Trevor Power, the Australian Treasury assistant secretary, emphasized that from the government’s perspective, they must invest more in curbing scams in order to maintain trust in the system. This responsibility is shared between the government, banks, and other entities in the financial system.”
Gilder, however, made it clear that CBA’s actions were not intended to be hostile towards the industry and do not necessarily imply any misdeeds by centralized exchanges.
Gilder expressed optimism regarding blockchain technology, noting that almost every bank has set up a digital assets team, demonstrating that “banks recognize” the necessity to comprehend the sector, she noted.
Michael Bacina, a digital asset lawyer from Piper Alderman and the chair of Blockchain Australia who moderated the session, is desiring an increased partnership between banks and the industry in order to combat scams collectively.
He emphasized the need for businesses in the blockchain and crypto sphere to work together with banks and payment providers to decrease the prevalence of scams as much as feasible, and that it is imperative to gain a deeper understanding of the data.
The decision taken by the bank has been met with disapproval from customers of Australian crypto exchanges. Nevertheless, Aaron Lane, an Australian lawyer and senior research fellow at the RMIT Blockchain Innovation Hub, has defended the banks’ actions.
Though “not ideal,” Lane noted that a “risk-based approach” is preferable to “outright debanking” for Australian-based cryptocurrency exchanges and their customers.
Australian Competition and Consumer Commission Reports on Investment Scams
Australians revealed as primary victims of Israeli cryptocurrency fraud ring.
The Australian Competition and Consumer Commission reported that Australians lost a total of 221.3 million Australian dollars ($148.3 million) to investment scams that used cryptocurrency as the payment method in 2022, representing a huge 162.4% rise from 2021.
Power determined that cryptocurrency is still a major source of scams in Australia, necessitating the need for both banks and the government to take action against it.
Magazine: The Dangers of Unstablecoins: Depegging, Bank Runs, and Other Perils.
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