Australia’s cryptocurrency industry faces continued banking challenges as major banks and the government maintain their stance against scams involving digital currencies. During a panel discussion at the Australian Blockchain Week on June 26, Sophie Gilder, Managing Director of Blockchain and Digital Assets at Commonwealth Bank (CBA), highlighted the bank’s restrictions on crypto exchange payments. These measures were implemented in response to a significant rise in scams involving cryptocurrency.
Australian banks bemoan an increase in crypto scams
Gilder revealed that approximately one in three dollar scams in Australia is associated with cryptocurrencies, making it the largest contributing factor to the impact on customers. Nigel Dobson, Banking Services Portfolio Lead at ANZ, cited data from the Australian Financial Crimes Exchange, suggesting that the figure could be as high as 40%.
On June 8, Commonwealth Bank (CBA) followed the lead of Westpac by imposing pauses, limits, and outright blocks on certain payments to cryptocurrency exchanges. Both banks cited the increasing threat of investment scams as the reason for these measures. However, Australia’s other major banks, ANZ and NAB, have yet to announce similar restrictions.
A Treasury official confirmed that the banks had implemented these measures voluntarily, but emphasized that both the banks and the government shared the view that cryptocurrency scams were unacceptably high at present. Trevor Power, Assistant Secretary at the Australian Treasury, highlighted the need for increased investment in scam reduction, stressing the importance of collaborative efforts between the government, banks, and other financial system participants to maintain trust in the system.
Gilder clarified that the measures implemented by CBA were not intended to target the cryptocurrency industry specifically, and they do not imply any wrongdoing by centralized exchanges. She emphasized that the measures were based on data analysis, identifying patterns of behavior and bad actors, which aligns with the existing practices of monitoring normal bank accounts. Gilder also expressed optimism about blockchain technology, highlighting that nearly every bank has established a digital assets team, indicating their recognition of the need to understand this evolving space.
Analysts call for collaboration between banks and crypto firms to tackle scams
Michael Bacina, a digital asset lawyer and chair of Blockchain Australia, who moderated the panel discussion, emphasized the importance of closer collaboration between banks and the industry to address the issue of scams collectively. He acknowledged the concerning figures presented by the banks regarding scams involving cryptocurrency as a payment rail and stressed the need for joint efforts to reduce such incidents.
The banks’ decisions have faced criticism from customers of Australian crypto exchanges. However, Aaron Lane, an Australian lawyer and senior research fellow at the RMIT Blockchain Innovation Hub, defended the banks’ actions. He noted that financial institutions are under mounting pressure to combat the growing problem of scams related to cryptocurrency.
Imposing time delays, transaction denials, and deposit limits are ways for banks to regain control and mitigate their legal and regulatory risks. According to the Australian Competition and Consumer Commission, Australians lost AUD 221.3 million ($148.3 million) to investment scams involving crypto as the payment method in 2022, marking a significant 162.4% increase from 2021.
Power emphasized that crypto remains a significant vector for scams in Australia, necessitating collaborative efforts between banks and the government to address the challenges posed by the sector. As the crypto industry continues to evolve in Australia, striking a balance between consumer protection, regulatory compliance, and fostering innovation will be crucial for sustained growth and stability in the digital asset landscape.