Commonwealth Bank Tightens Crypto Payment Regulations
In response to recent legal actions against major cryptocurrency exchanges, Binance and Coinbase, Commonwealth Bank has imposed restrictions on transfers to high-risk crypto exchanges for crypto payments
Australia’s largest bank introduced several fraud protection measures, following Westpac’s lead, to prevent customers from converting Australian dollars to cryptocurrency assets due to the prevalence of scams.
“Recovering money from crypto exchanges is incredibly challenging,” stated the General Manager of Group Fraud, James Roberts.
“We can usually ask other Australian banks to preserve fraudulent money, but when it hops across crypto wallets worldwide instantly, the recovery rate is very low.”
While CBA did not disclose the specific exchanges affected by the new restrictions, it is understood that Binance, which recently lost its Australian banking partner Cuscal and ASIC-issued derivatives license, will be included.
In addition to outright bans, Commonwealth Bank will implement a 24-hour transaction hold for customers seeking to transfer funds to any crypto exchanges. Moreover, there will be a monthly limit of $10,000 imposed on such transactions.
“We recognize there will be an impact on some people, but the scale of investment scams involving crypto exchanges is so large we have to take assertive measures,” Mr. Roberts said.
Read CBA’s full statement here.
Every day, a significant amount of money, reaching hundreds of thousands of dollars, is being transferred from CBA accounts to cryptocurrency exchanges as customers fall victim to a rising number of fraudulent schemes disguised as cryptocurrency investment opportunities.
Last year, CBA decided to halt the launch of its in-app cryptocurrency trading due to a widespread decline in digital asset markets and concerns surrounding exchange liquidity. Although the bank had initially planned to enable customers to buy and sell cryptocurrencies through its app, it abruptly suspended the pilot program without providing a revised timeline.
According to the Australian Financial Review, while Australian cryptocurrency exchanges were not officially informed about CBA’s intention to impose restrictions on transfers, Caroline Bowler, the CEO of BTC Markets, acknowledged a slight uptick in fraud recalls originating from the bank.
“It is important to keep in mind that despite the significance of the SEC [Securities and Exchange Commission], they do not regulate crypto in Australia,” said Ms. Bowler discussing the notion of the US regulatory moves this week bringing charges against Binance and Coinbase for operating as unregistered exchanges within the US.
Read about the SEC filing its lawsuit against Coinbase here.
Read about the SEC filing its lawsuit against Binance here.
Disparities in “know your customer” (KYC) practices have led to a divergence between global cryptocurrency exchanges, such as Binance, and local players like BTC Markets.
Binance adopts a minimal information approach for customer trading access, while local exchanges have instituted onboarding procedures incorporating verification processes akin to those utilized by banks.
Ms. Bowler notes that the cryptocurrency industry in Australia has collaborated with successive governments to formulate a regulatory framework that is both proportionate and suitable for the country.
