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Australian banks claim 40% of scams ‘touch’ crypto as it defends restrictions

During a panel at the Australian Blockchain Week, executives from Australia’s major banks explained why they added restrictions on payments to local crypto exchanges.

Australia’s cryptocurrency industry banking woes will likely continue, with the government and major banks signaling no intention to back down against scams that “touch” crypto.

During a panel at the Australian Blockchain Week on June 26, Sophie Gilder, managing director of blockchain and digital assets at Commonwealth Bank (CBA) shed light on the bank's restrictions on crypto exchange payments, noting it was put in place after seeing an alarming rate of scams that ended up involving cryptocurrency.

“One in three of the dollars that are scammed from Australians touch crypto, one in three. So it’s the single largest lever that we have to reduce this impact on our customers,” she said.

Commonwealth Bank's Sophie Gilder speaking in a panel during Australian Blockchain Week. Source: Cointelegraph

Nigel Dobson, banking services portfolio lead at ANZ, referred to data from the Australian Financial Crimes Exchange suggesting that the figure may be even higher, at 40%.

On June 8, CBA followed Westpac’s lead in imposing pauses, limits and outright blocks on certain payments to cryptocurrency exchanges, both citing an increasing threat of investment scams. 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 moves so far have come at the banks’ own “volition” but that both the banks and the government have a “shared view” that cryptocurrency scams are “unacceptably high” at the moment.

“From the government's point of view, [they] need to invest more in reducing scams, and that’s the government, but it's also banks, other people in the financial system have to work together to reduce scams to maintain trust in the system," said Trevor Power, the Australian Treasury assistant secretary.

Not an attack on crypto

However, Gilder clarified that CBA’s measures weren’t made to attack the industry and doesn’t necessarily reflect any wrongdoing by centralized exchanges.

“It’s not industry specific. It’s based on data, patterns of behavior and identifying bad actors. So we do this with normal bank accounts already. So in that way, there’s definitely parallels to work that we already do.”

Gilder was also bullish about blockchain technology, noting that nearly every bank has established a digital assets team — a sign that “banks recognize” the need to understand the space, she said.

Digital asset lawyer Michael Bacina of Piper Alderman — the chair of Blockchain Australia and also the moderator of the session — is hoping for closer collaboration between the banks and the industry to tackle the issue of scams together. 

“The banks have put forward concerning figures of scams touching crypto as a payment rail in some way.”

“It’s important to understand that data in more detail, but what is clear is that businesses in the blockchain and the crypto industry need to work collaboratively with banks and payment providers to ensure that scams are reduced as much as possible,” he added.

The bank’s decision has continued to meet criticism from Australian crypto exchange customers. Australian lawyer and senior research fellow at the RMIT Blockchain Innovation Hub Aaron Lane has defended the banks' actions, however.

“Banks and other financial institutions are under increasing pressure to tackle the growing problem of scams involving cryptocurrency. Imposing time delays, declining transactions, and placing deposit limits are all mechanisms for banks to retake control and limit their legal and regulatory risks.”

While these measures “may not be ideal” for Australian-based crypto exchanges and their customers, Lane said that a “risk-based approach is better than outright debanking.”

Related: Aussies revealed as prime targets of Israel crypto scam syndicate

According to the Australian Competition and Consumer Commission, Australians lost 221.3 million Australian dollars ($148.3 million) from investment scams where crypto was used as the payment method in 2022 — a massive 162.4% increase from 2021.

Power concluded that crypto remain a “significant vector” for scams in Australia, which calls on both banks and the government to clamp down on the sector.

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Binance Australia got 12 hours’ notice before it was debanked, says exec

Binance Australia head Ben Rose claimed the exchange got less than a day's warning from its payments partner before it was "cut off" from the local banking system in May.

In the middle of the night, Binance Australia’s team was suddenly told it would be “cut off” from Australia’s banking system. There was no prior warning, consultation or redress, the exchange’s regional manager Ben Rose has claimed.

On May 18, Binance Australian announced its dollar services were suspended after its payments provider Zepto was told to stop support for Binance from Cuscal — Zepto’s partner banking and payments provider.

Rose told an audience at the Australian Blockchain Week on June 26 that the move impacted around 1 million customers based in Australia.

“We received 24 hours' notice of debanking at 11:30 pm in the evening, that was later turned into 12 hours, and so we had our banking cut off.”

“The reasons given were not entirely clear and didn't look that great in the media,” said Rose. Previously, a Cuscal spokesperson declined to comment on Binance Australia-related matters to Cointelegraph but did point to crypto-related “scams and fraud.”

The limited information initially worried Binance customers but “that tone changed pretty quickly” when it became clear it was the wider local crypto industry “impacted by these banking changes,” Rose said.

Ben Rose (right) on stage at the Australian Blockchain Week. Source: Cointelegraph

The same day Cuscal offboarded Binance, “Big Four” bank Westpac said it would begin trials that block payments to crypto exchanges. Less than a month later Commonwealth Bank, another major Australian bank, started similar crypto-related payment blocks.

Speaking to Cointelegraph after his on-stage interview, Rose declined to provide any extra information about Binance Australia’s search for an alternate third-party payments provider as discussions were ongoing.

Rose said there are other providers but admitted that Cuscal “bank the majority of this industry.”

Australia’s crypto industry has long relied on crypto-friendly payments providers including Monoova, Zai and Zepto — all of who are partnered with Cuscal to access the local banking system.

Cuscal-backed payment rails are used by Binance’s peer crypto exchanges including BTC Markets, Kraken Australia, CoinJar, Independent Reserve and many other crypto-related fintech firms.

Related: Don’t follow the US: Blockchain Aus CEO hammers ‘regulation by enforcement’

On stage, Rose claimed losing access to their banking partner “hasn't had a real impact on the business.” He added Binance users are “using other methods,” likely the purchases and deposits to bank cards that are still supported on the platform.

He stressed the need to work with regulators and the banking sector and the possibility of implementing “sensible licensing” for the industry.

“We would call for Australia to move relatively quickly because jurisdictions all around the world are now moving forward," Rose said.

"We have a window as a country and we think there's an opportunity, but there's also a risk if we don't move on licensing relatively quickly.”

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Bear market pushes crypto events to cut fluff, prioritize discourse

“Huge DJs” no longer appear at crypto events, instead, attendees are seeing more “well thought out, intelligent questions” being asked.

The extended crypto winter has pushed crypto event organizers to tone down on the lavishness, allowing attendees to focus on asking more “intelligent questions” about regulation and tax.

Crypto conferences attract all sorts from the crypto space, from founders and high-level executives to crypto influencers and everyday users.

Tiffany Fong, a crypto vlogger who gained fame interviewing former FTX CEO Sam Bankman-Fried following the collapse of the exchange, is attending crypto conferences for the first time this year.

Speaking to Cointelegraph, Fong — who attended both Bitcoin Miami 2023 and NFT NYC 2023 — said she “can’t speak to how conferences used to be in the bull markets,” but has been told by other attendees that it is lighter on the entertainment side this year.

“People have named dropped huge DJs that have performed in past conferences during bull markets and point out that the parties and events are much tamer this year.”

Fong isn’t too “bothered by this year being more tame” as she believes the enthusiasm for crypto remains strong and is an opportunity to meet others in the industry.

Meanwhile, over the weekend, XRP Las Vegas — a conference for XRP (XRP) fanatics and the “XRP-army” — took place on May 6 and 7 in the United States' gambling capital.

Attendees showed “great optimism over crypto’s future,” pro-XRP lawyer John Deaton told Cointelegraph.

Deaton, who has been an active social media commentator throughout the Securities and Exchange Commission (SEC) and Ripple lawsuit, said XRP fans were asking “well thought out, intelligent questions” at the conference. Still, he could sense the frustration in their questions.

“I wouldn’t classify their emotion as one of fear but frustration because it shouldn’t be this difficult or take this long to achieve regulatory clarity in the United States.”

Deaton further added that the frustration was towards the SEC chair Gary Gensler’s “regulation by enforcement” approach to crypto, following the SEC taking action against several crypto firms in recent times.

Regulation appears to be top of mind for the crypto community in Australia too.

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Regulation was “by far” the most popular point of discussion among attendees at Binance Australia’s most recent meetup event on May 3, according to Ben Rose, general manager for Binance Australia and New Zealand.

Rose told Cointelegraph that crypto tax was another topic that had a high level of interest from attendees.

He added that there is still “interest from the crypto-curious” despite the bear market.

“More recently there’s been a lot of newcomers attending asking beginner-level questions, which is encouraging.”

Rose emphasized that Australian crowds are starting to get excited about “a potential bull run [given] the price of Bitcoin has crept up.”

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