Australia’s cryptocurrency industry is facing ongoing challenges, as the government and major banks show no signs of backing down against scams involving digital currencies. During a panel at the Australian Blockchain Week, representatives from Commonwealth Bank (CBA) and ANZ discussed the alarming rate of scams that have involved cryptocurrencies. Sophie Gilder, Managing Director of Blockchain and Digital Assets at CBA, revealed that one in three dollars scammed from Australians are linked to crypto, making it the single largest lever to reduce the impact of scams on customers.
Nigel Dobson, Banking Services Portfolio Lead at ANZ, added that data from the Australian Financial Crimes Exchange suggests that the figure may be even higher at 40%. In response to this increasing threat of investment scams, CBA followed Westpac’s lead and imposed pauses, limits, and outright blocks on certain payments to cryptocurrency exchanges. However, it is worth noting that Australia’s other two major banks, ANZ and NAB, have not yet indicated whether they would impose similar restrictions.
A Treasury official confirmed that the decisions made by the banks thus far have been voluntary, but both the banks and the government share the view that cryptocurrency scams are unacceptably high. Trevor Power, the Assistant Secretary of the Australian Treasury, stressed the need for government investment and collaboration among all financial system participants to reduce scams and maintain trust in the system.
It is important to note that CBA’s restrictions on crypto exchange payments are not intended to attack the industry or imply any wrongdoing by centralized exchanges. Gilder emphasized that the measures are based on data, patterns of behavior, and identifying bad actors, which aligns with the normal practices of the bank. She also highlighted the fact that nearly every bank has established a digital assets team, showing that they recognize the importance of understanding the blockchain space.
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Michael Bacina, a Digital Asset Lawyer and Chair of Blockchain Australia, called for closer collaboration between the banks and the crypto industry to tackle scams together. He stressed the need for detailed analysis of the data to fully understand the issue, but emphasized the importance of reducing scams through collaborative efforts between businesses in the blockchain and crypto industry, and banks and payment providers.
Although the banks’ actions have faced criticism from Australian crypto exchange customers, Aaron Lane, a lawyer and senior research fellow at the RMIT Blockchain Innovation Hub, defended their actions. He stated that banks and financial institutions are under increasing pressure to address the growing problem of scams involving cryptocurrencies. The measures imposed by the banks, such as time delays, declined transactions, and deposit limits, are mechanisms for banks to regain control and limit legal and regulatory risks. While these measures may not be ideal for Australian-based crypto exchanges and their customers, Lane believes that a risk-based approach is preferable to outright debanking.
The Australian Competition and Consumer Commission reported that Australians lost 221.3 million Australian dollars ($148.3 million) to investment scams involving crypto as the payment method in 2022, marking a staggering 162.4% increase from the previous year. Trevor Power concluded that crypto remains a significant vector for scams in Australia, warranting collaborative efforts between banks and the government to combat the issue.
In summary, Australia’s cryptocurrency industry continues to face challenges as the government and major banks take action to combat scams involving digital currencies. While these measures may inconvenience some crypto exchanges and customers, they are seen as necessary steps to reduce the impact of scams and maintain trust in the financial system. Collaborative efforts between banks, the crypto industry, and the government are crucial in addressing this issue and protecting consumers from fraud.
