Bendigo Bank, one of Australia’s major banks, recently blocked “high-risk crypto payments” to protect its 2.3 million customers from investment scams. The move follows similar actions taken by three other major banks in the country – Commonwealth Bank, National Australia Bank (NAB), and Westpac.
The bank’s head of fraud, Jason Gordon, stated that the new rules add some friction to certain genuine payments made to crypto exchanges to combat fraudulent transactions and enhance customer protection. However, the bank has not provided further details about the specific transactions that will be blocked, nor has it disclosed the exchanges that may be affected.
Identifying high-risk transactions uses a combination of factors, according to a spokesperson who declined to elaborate on the specifics. Such actions by banks may push Australia’s crypto community to interact with offshore exchanges, as warned by Chengyi Ong, Chainalysis APAC Policy Head, in a recent interview. Ong believes these blocks won’t deter criminal actors from using alternative platforms, and uncertainty over banking access could lead exchanges and users to operate outside authorities’ jurisdiction.
Instead of solely relying on de-banking measures, Ong advocates for collaboration among banks, regulators, telecommunication providers, and social media platforms at every stage of the scam lifecycle. By targeting all potential attack vectors and points of interaction between scammers and victims, more effective protection can be achieved.
Dr Aaron Lane, a senior lecturer with the RMIT Blockchain Innovation Hub, suggests that banks should work constructively with crypto exchanges to ensure consumer protection. Debanking should be reserved for cases of serious and unacceptable risk rather than taking a blanket approach towards the entire crypto industry or asset class.
Australia has been considering crypto-specific regulations for over three years, and experts like Dr Lane urge lawmakers to address crypto law reform proactively instead of avoiding the issue. The Department of the Treasury also expressed concerns about inaction on debanking, stating that it could stifle financial services competition and innovation, leading businesses to operate exclusively in cash or move underground. To avoid such outcomes, a comprehensive approach involving various stakeholders is necessary to address the challenges of crypto-related scams.
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