Executives from Australia’s major banks discussed why they put limits on payments to local crypto exchanges during a panel discussion at the Australian Blockchain Week.
Australia’s bitcoin banking difficulties are expected to persist, with the government and big banks indicating no intention of backing down from schemes that “touch” cryptocurrencies.
Managing director of blockchain and digital assets at Commonwealth Bank (CBA), Sophie Gilder, discussed the bank’s limitations on crypto exchange payments during a panel at the Australian Blockchain Week on June 26. She noted that the restrictions were put in place as a result of the alarming number of scams that ultimately involved cryptocurrency.
One in three of the dollars taken from Australians in scams involves cryptocurrency. In order to lessen this effect on customers, it is the single-largest lever they have, she explained.
Data from the Australian Financial Crimes Exchange, cited by Nigel Dobson, banking services portfolio lead at ANZ, indicates that the percentages may be much higher as 40%.
Westpac and CBA both cited the rising risk of investment fraud when they announced delays, limitations, and outright blocks on some payments to cryptocurrency exchanges on June 8. The ANZ and NAB, Australia’s other two main banks, have not yet said if they would apply comparable limitations.
The actions thus far have been taken at the banks’ own initiative, according to a Treasury official, although the banks and the government share the opinion that the number of cryptocurrency scams is currently “unacceptably high.”
The Australian Treasury assistant secretary, Trevor Power, stated that from the government’s perspective, they need to invest more in reducing scams. In addition to the government, banks and other participants in the financial system must also work together to do this in order to preserve public confidence in the system.
Not an attack on crypto
Gilder emphasized that CBA’s actions were not intended to target the sector and do not necessarily indicate misconduct by centralized exchanges.
It isn’t sector-specific. It is based on data, behavioral patterns, and the detection of bad actors. Therefore, we already do this with regular bank accounts. There are clearly similarities to the work that we already do in that sense.
Gilder was also optimistic about blockchain technology, pointing out that almost every bank has put up a team for digital assets, indicating that “banks recognize” the need to comprehend the area, in her words.
In order to combat scams, the industry and banks should work more closely together, according to Michael Bacina of Piper Alderman, chair of Blockchain Australia, and moderator of the event.
According to the banks, there have been a number of scams involving cryptocurrency in some way as a payment channel.
It’s critical to comprehend those statistics in greater depth, but what is undeniable is that organizations in the blockchain and cryptocurrency sectors must cooperate with banks and payment processors in order to ensure that frauds are minimized to the greatest extent, he added.
Customers of Australian cryptocurrency exchanges have continued to express their disapproval of the bank’s stance. However, Aaron Lane, an Australian attorney and senior research fellow at the RMIT Blockchain Innovation Hub, has supported the banks’ actions.
According to him, banks and other financial institutions are coming under more and more pressure to address the growing issue of cryptocurrency scams. In order to regain control and reduce their legal and regulatory risks, banks can impose time restrictions, reject transactions, and set deposit limitations.
A risk-based strategy, according to Lane, is preferable to outright debanking, even though these procedures might not be ideal for Australian crypto exchanges and their users.
In 2022, a staggering 162.4% rise over 2021, the Australian Competition and Consumer Commission reported that Australians lost 221.3 million Australian dollars ($148.3 million) as a result of investment scams in which cryptocurrency was utilized as the payment mechanism.
Power’s conclusion that cryptocurrency remains a “significant vector” for fraud in Australia calls for both banks and the government to tighten regulations on the industry.
