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Australia's Commonwealth Bank limits crypto transactions amid fraud concerns

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(Kitco News) - The Commonwealth Bank of Australia (CBA), the country’s largest bank, has announced the introduction of new measures designed to protect customers from the risks associated with cryptocurrencies, including placing a 24-hour hold on some payments to crypto exchanges.

“From today, CBA will decline or hold for 24 hours certain payments to cryptocurrency exchanges,” the bank said in the press release. “In coming months the Bank will also introduce $10,000 limits in a calendar month where the Bank can identify the customer payments are to exchanges for cryptocurrency purchases.”

This move by CBA comes as the two largest cryptocurrency exchanges in the world – Binance and Coinbase – are facing lawsuits from the U.S. Securities and Exchange Commission (SEC) while major Australian bank Westpac has banned customers from transacting with Binance.

“Consumer interest in cryptocurrencies has been increasing and unfortunately scammers globally are capitalising on this trend and masquerading as legitimate investment opportunities or diverting funds into cryptocurrency exchanges,” said James Roberts, Commonwealth Bank General Manager of Group Fraud Management Services. “With the incidences of scams increasing and in many cases customers suffering significant losses from being scammed, the introduction of 24 hour holds, declines and limits on outbound payments to cryptocurrency exchanges will help reduce both the number of scams and the amount of money lost by customers.”

The bank will closely monitor the impacts of the new scam response measures moving forward and will hold regular reviews to reevaluate if the measures need to be adjusted.

“Customers who make payments to cryptocurrency exchanges are currently facing a significantly higher risk of potentially being scammed,” Roberts said. “While these measures will not eliminate the risk of customers suffering losses as a result of a scam that involves a payment to a cryptocurrency exchange, they are part of a range of initiatives designed to help customers reduce their risk of falling victim to a scam.”

The new measures come on the heels of an announcement that the CBA will be offering its NameCheck anti-fraud technology to external organizations that process payments in Australia as part of a broad national approach to help combat scams and frauds across the community.

NameCheck uses advanced technology and available payment data to determine whether account details entered by a customer look correct, which helps ensure that money is being transferred to the correct account.

“Across Australia a whole-of-ecosystem approach is required to combat scams and CBA is committed to helping keep customers safe, as part of a broader national focus by government, regulators, banks and other industry sectors,” Roberts said. “We are committed to being part of the broader solution with government, regulators, banks, telcos and other industry sectors to keep Australians safe.”

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Today’s announcement represents a sharp about-face for Commonwealth Bank, which announced in November 2021 that it would become the country's first main-street bank to offer a platform for retail customers to trade cryptocurrencies.

The bank partnered with New York-based exchange Gemini Trust Company LLC to offer crypto exchange and custody services via its CommBank app. The pilot for the service was ultimately shelved in May 2022 after Australia’s financial regulators deemed it to be too risky for the average investor.

Gemini has since run into its own host of troubles – including charges by the U.S. Securities and Exchange Commission that they violated securities laws – which likely contributed to the CBA’s decision to limit crypto transactions until the industry's financial and regulatory challenges subside.

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