National Australia Bank (NAB) has implemented measures to block certain payments to crypto exchanges deemed “high-risk,” following similar actions taken by other major Australian banks, including Commonwealth Bank of Australia and Westpac, according to reports on July 17.
The NAB warned that crypto scams are putting Australians at risk, causing losses of $151 million in 2022. Subsequently, it has taken steps to protect its client base and won’t process fiat payments to certain exchanges it deemed “high risk.”According to recent Australian Financial Crimes Exchange data, nearly half of all reported scam funds in the past month were crypto-related.
Although the bank took a cautionary measure, it didn’t clarify which cryptocurrency exchange had been impacted. At the same time, the bank didn’t expound on the extent of the damage, offering the precise number of customers impacted.
NAB’s intervention follows the decision by Westpac, which on May 18 became the first leading bank in Australia to take steps to protect clients from crypto scams. In May, payment processing firm, Cuscal also announced it was suspending processing AUD deposits to Binance Australia, saying it wanted to protect citizens from scams and crime.
However, Westpac, at that time, didn’t say whether Binance Australia was a high-risk exchange. Although regulators around the world have been increasingly taking legal action against Binance and its local branches in recent months.
Blocking payments to crypto exchanges by Australian banks could hinder the money laundering of stolen funds from crypto holders. Unlike fiat, crypto transactions are immutable, meaning they can’t be reversed once transferred though most operate from public ledgers like Bitcoin or Ethereum. Moreover, some like Monero have privacy features preventing users or government agencies from tracking.
The Australian government is also taking action against crypto scams. For example, in June 2023, the Australian Securities and Investments Commission (ASIC) launched a campaign to educate investors about crypto risks and how to avoid scammers.
The FBI in 2022 reported that crypto holders lost over $10 billion to fraud, a 40% increase from 2021. The investigative agency noted that most users fell victim to investment scams, with crypto holders losing upwards of $3.3 billion in such schemes.
In January, NAB launched AUDN, a stablecoin backed by AUD for real-time settlement of transactions, including trading carbon credits and remittance. The NAB released the stablecoin following ANZ’s similar initiative with A$DC in 2022.
In crypto, stablecoins are digital assets that track the underlying asset, including fiat currencies like the AUD or USD. They are backed and should be periodically audited if issued by a private entity like Circle or Tether Holdings.
Notably, NAB and ANZ actively engage with financial regulators to formulate stablecoin regulations for smooth compliance and building a regime that aligns with the best practices while not stifling growth.
Feature image from Canva, chart from TradingView