HSBC Australia recently informed customers that it will stop processing payments to cryptocurrency exchanges as of July 24. The decision is attributed to customer protection concerns, a bank spokesperson confirmed.
However, the bank said it will continue to allow customers to receive funds from cryptocurrency exchanges into their accounts.
“If you wish to make payments on cryptocurrency exchanges, you will need to make alternative arrangements,” the email to customers reads. The bank did not provide details on which cryptocurrency exchanges would be affected by the restrictions.
An HSBC spokesperson told Cryptonews that this fraud prevention system will help reduce the damage that investment fraud can do to customers. They added that once funds are sent to cryptocurrency exchanges, recovery is often impossible. This is the motivation for implementing these changes.
HSBC follows other Australian banks in restricting cryptocurrency payments
HSBC Australia justified its decision with reference to data from the Australian Competition and Consumer Regulator. It pointed out that Australians suffered up to $171 million in losses due to cryptocurrency-related investment fraud in 2023.
Moreover, the lender’s decision to block payments to cryptocurrency exchanges follows a similar move by Australia’s “big four” banks about a year ago. Commonwealth Bank, National Australia Bank, Westpac and Australia and New Zealand Banking Group cited concerns about fraud and other risks associated with cryptocurrency trading as the main reason for restricting access to these platforms.
Australia signals growing threat of cryptocurrency money laundering
In addition, Australia’s financial intelligence agency recently warned of an escalating risk of money la undering through cryptocurrencies. In particular, the agency has identified major money laundering vulnerabilities associated with digital currencies used for payments. Looking ahead, it expects these risks to continue to grow.
In addition, both cryptocurrency exchanges and digital assets used as a store of value have been classified as having a medium risk of money laundering, with the risk expected to increase over the next three years.
