The Spread of the US-led crackdown on Cryptocurrencies Results in Commonwealth Bank of Australia Imposing Restrictions on Crypto Payments

In response to the recent legal action taken against major cryptocurrency exchanges Binance and Coinbase, Commonwealth Bank has implemented restrictions on transfers to high-risk crypto exchanges. 

Australia’s largest bank introduced a range of fraud protection measures, following in the footsteps of Westpac, to prevent customers from converting Australian dollars to cryptocurrency assets due to the prevalence of scammers.

“Our ability to recover money from crypto exchanges is incredibly difficult,” 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 all around the world 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 licence, will be included.

In addition to certain 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 recognise 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.

You can 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.

We did an article on the SEC filing its lawsuit against Coinbase here.

We did an article on the SEC filing its lawsuit against Binance here.

Differences in “know your customer” (KYC) practices have resulted in a divide between global cryptocurrency exchanges like Binance and local players such as BTC Markets.

Binance requires minimal information from customers before granting them trading access, while local exchanges have implemented onboarding procedures that include verification processes similar to those used by banks.

According to Ms. Bowler, the cryptocurrency industry in Australia has collaborated with successive governments to establish a regulatory framework that is both proportionate and suitable for the country.