Australia’s government and central banks have raised the alarm over the growing prevalence of cryptocurrency scams. During a panel discussion at the Australian Blockchain Week on June 26, Sophie Gilder, the managing director of blockchain and digital assets at Commonwealth Bank (CBA), shed light on the bank’s restrictions on crypto exchange payments. These measures were implemented in response to a concerning rate of scams that involved cryptocurrency transactions.
Gilder revealed that one in three of the dollars scammed by Australians touch crypto. Nigel Dobson, the banking services portfolio lead at ANZ, even suggested that the figure could be as high as 40%, citing Australian Financial Crimes Exchange data.
On June 8, CBA followed Westpac’s lead by imposing pauses, limits, and outright blocks on certain payments to cryptocurrency exchanges. Both banks cited an increasing threat of investment scams for these measures. However, Australia’s other two central banks, ANZ and NAB, have yet to indicate whether they will implement similar restrictions.
A Treasury official confirmed that the banks’ actions thus far have been voluntary but emphasised that both the banks and the government believe that cryptocurrency scams are unacceptably high. Trevor Power, the Australian Treasury assistant secretary, stated that reducing scams requires government and financial institutions’ investment to maintain trust in the system.
Gilder clarified that CBA’s measures did not target the entire industry and did not imply any wrongdoing by centralised exchanges. The restrictions were based on data, patterns of behaviour, and the identification of bad actors, similar to the measures already taken with regular bank accounts.
Regardless of the challenges, Gilder expressed optimism about blockchain technology, highlighting that nearly every bank has established a digital assets team. This recognition demonstrates that banks acknowledge the need to understand the space.
Michael Bacina, a digital asset lawyer and chair of Blockchain Australia, called for closer collaboration between banks and the industry to collectively address the issue of scams. Bacina highlighted the importance of working collaboratively with banks and payment providers to reduce scams within the blockchain and crypto industry.
Reporting from @jessicasier @FinancialReview that @CommBank have banned AUD transfers to “high-risk” crypto exchanges & limited transactions with others to $10k per month, with a 24 hr delay. $700k per day leaves CBA as scammed money heading to crypto. Banks & the crypto industry…
— Caroline Bowler (@CaroBowler) June 8, 2023
The banks’ decisions have faced criticism from Australian crypto exchange customers. However, Aaron Lane, an Australian lawyer and senior research fellow at the RMIT Blockchain Innovation Hub, defended the banks’ actions, noting that they are under increasing pressure to tackle the growing problem of crypto-related scams.
According to the Australian Competition and Consumer Commission, Australians lost AUD 221.3 million to investment scams involving crypto as the payment method in 2022, representing a significant 162.4% increase from the previous year.
Power concluded that crypto remains a significant avenue for scams in Australia, necessitating concerted efforts from both banks and the government to address the issue.