The Commonwealth Bank of Australia (CBA) has started holding transfers to cryptocurrency exchanges for 24 hours and is banning payments to an unnamed list of exchanges in a bid to stop scam payments.
James Roberts, CBA's general manager of group fraud management services, said the popularity of cryptocurrencies has seen scammers “masquerading as legitimate investment opportunities or diverting funds into cryptocurrency exchanges”.
“Customers who make payments to cryptocurrency exchanges are currently facing a significantly higher risk of potentially being scammed,” he said.
CBA’s decision to curtail crypto transfers follows a similar move by Westpac which last month began blocking payments to Binance, the world’s largest cryptocurrency exchange which is coming under serious regulatory scrutiny.
Jonathon Miller, managing director of the Australian arm of crypto exchange Kraken, said he didn’t think “broad policy decisions” to shut off access to crypto exchanges was the way to stop scammers.
“We have to accept that people want to own crypto assets and it’s up to both exchanges and traditional financial institutions to establish functional partnerships that allow individuals and businesses to make this choice,” Miller said.
“This will require substantial work and effort for both sides – but is beneficial to all given the potential of the industry’s future.”
Miller warned that policies like those coming out of Westpac and CBA, “effectively make a current account service provider the gatekeeper to this inclusive financial technology” and may create “concentration risks among a select group of ‘sanctioned players’” in the market.
Australia’s major banks have been previously criticised for refusing to give local cryptocurrency companies bank accounts – a phenomenon known as ‘de-banking’ – while they went about working on their own crypto-related projects.
And Westpac made a tidy $288 million gain from its venture capital arm Reinventure investing in US crypto exchange Coinbase.
Caroline Bowler, CEO of Australian crypto exchange BTC Markets, said it was important for banks and the local industry to work together “to protect our mutual clients”.
“This needs to happen alongside a national conversation on how to spot a scam, and other protections,” she said.
“These criminals are sophisticated and we need to be smarter and work together if we’re to beat them.”
According to the latest Australian Competition and Consumer Commission (ACCC) Targeting Scams report, scam payments made through cryptocurrency resulted in at least $160 million worth of lost money in 2022.
Bank transfers are still the most popular scam transfer method with 13,098 losses reported in 2022 to the tune of $210 million.
Australian banks have begun cross-matching data to the Fraud Report Exchange in the hope of stopping scam payments in real time.