Written by Hazel J. Greene, Senior Analyst

National Australia Bank (NAB) has taken proactive steps to protect its clients from crypto scams, joining other major Australian banks in blocking certain payments to crypto exchanges deemed “high-risk”. Recent reports indicate that these measures have been initiated after the Commonwealth Bank of Australia and Westpac undertook similar actions.

In an effort to safeguard its clients, NAB has highlighted the alarming increase in crypto scams, with reported losses of $151 million in 2022. Consequently, the bank has chosen to cease processing fiat payments to specific exchanges it identifies as “high-risk.” Recent data from the Australian Financial Crimes Exchange indicates that nearly half of all reported scam funds in the past month were related to cryptocurrency.

Although NAB has taken this prudent measure, it has not explicitly disclosed the impacted cryptocurrency exchanges. Moreover, the bank has refrained from revealing the exact number of affected customers.

Westpac, which initially took action on May 18 to protect its clients from crypto scams, also refrained from indicating whether Binance Australia, one of the leading exchanges in the country, was considered high-risk. Nevertheless, regulators worldwide have escalated legal action against Binance and its local branches in recent months.

The move by Australian banks to block payments to crypto exchanges holds the potential to impede money laundering of stolen funds from crypto holders. Unlike fiat transactions, crypto transfers are immutable and cannot be reversed once completed, although most transactions occur on public ledgers like Bitcoin or Ethereum. Some cryptocurrencies, like Monero, even offer privacy features that prevent tracking by users or government agencies.

Parallel to the actions taken by banks, the Australian government has intensified its efforts against crypto scams. For instance, in June 2023, the Australian Securities and Investments Commission (ASIC) initiated an educational campaign to inform investors about crypto-related risks and how to avoid falling victim to scammers.

The Federal Bureau of Investigation (FBI) revealed that crypto holders lost over $10 billion to fraud in 2022, marking a 40% increase from the previous year. The majority of users fell victim to investment scams, resulting in losses exceeding $3.3 billion.

Additionally, it is worth noting that NAB ventured into the stablecoin space earlier this year with its launch of AUDN. This stablecoin, backed by the Australian dollar, facilitates real-time settlement of various transactions, including trading carbon credits and remittance. NAB’s initiative follows a similar move by ANZ, which introduced the A$DC stablecoin in 2022.

Stablecoins, within the crypto realm, are digital assets that mirror the value of underlying assets, such as fiat currencies like the AUD or USD. When issued by private entities like Circle or Tether Holdings, periodic audits ensure transparency and trust.

Both NAB and ANZ actively collaborate with financial regulators to establish stablecoin regulations that promote compliance while nurturing growth and innovation. By aligning with best practices in the industry, these banks are committed to creating a robust and secure stablecoin ecosystem.

As the threat of crypto scams persists, it is crucial for financial institutions, regulators, and users to work together towards greater transparency, education, and regulation to protect investors and maintain the integrity of the crypto market in Australia.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.