The Bendigo Bank has recently blocked “high-risk crypto payments, making it the fourth major Australian bank to do so. Their motive behind this action is to safeguard customers from falling prey to investment scams.
Chainalysis policy lead, Chengyi Ong, issued a cautionary statement, expressing the possibility that crypto enthusiasts might eventually be left with no alternative but to engage with offshore, unregulated exchanges.
Jason Gordon, the bank’s head of fraud, announced new regulations for instant payments to crypto exchanges on July 31. These measures aim to combat fraud and protect their 2.3 million customers, despite some complexity for genuine payments.
The bank, however, refrained from divulging specific details regarding the instant crypto transactions flagged as high risk. When questioned, a Bendigo Bank spokesperson revealed using “a combination of factors” to identify such transactions but refused elaborating further. Additionally, the bank chose not to disclose which exchanges might be impacted by their recent policy changes.
Bendigo Bank’s Motive Behind Blocking High-Risk Crypto Payments
Bendigo Bank’s decision to implement blocks on crypto transactions mirrors actions taken by three of Australia’s Big Four banks, namely Commonwealth Bank, National Australia Bank (NAB), and Westpac.
Chengyi Ong, voiced his concern about the possible consequences of such actions. He suggested that this move might push Australia’s crypto community to seek interaction with offshore exchanges. Ong argued that even with these blocks, criminal actors could still utilize other platforms, crypto-related or otherwise.
Furthermore, the uncertainty surrounding banking access might drive both exchanges and users beyond the reach of local authorities.
Ong’s perspective calls for collaboration between banks, regulators, and social media platforms at every stage of the scam lifecycle. In his view, addressing all potential attack vectors and touchpoints between victims and scammers is crucial.
Dr. Aaron Lane, RMIT Blockchain Innovation Hub senior lecturer, supports banks collaborating with exchanges for consumer protection. He emphasized that debanking, should target individual cases of severe and unacceptable risk, not entire industries or asset classes.
Australia has been contemplating crypto-specific laws for more than three years. Dr. Lane urged lawmakers to take a proactive approach to crypto law reform. He advised against shelving the issue due to its perceived complexity.
The statements from Ong and Dr. Lane echo the official communication released by the Department of the Treasury in June, which also included similar warnings. The Treasury acknowledged that their inaction on debanking could impede financial services competition and innovation, potentially driving businesses to operate in the shadows, relying solely on cash transactions.
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