- HSBC Australia halts outbound payments to cryptocurrency exchanges, effective 24 July 2024.
- The bank cites scam-related losses and the irreversible nature of crypto transactions as reasons.
- Despite crypto’s use in crime, cash remains the preferred method for criminal transactions.
As reported earlier, HSBC Australia has stopped customers from sending money to cryptocurrency exchanges. The sweeping change was made without prior notice and came as a surprise to customers.
The bank said customers could still withdraw funds from crypto exchanges to HSBC bank accounts but anything vice versa is now being blocked from 24 July 2024 onward. Customers received an email late Wednesday stating they could no longer make transfers to crypto exchanges – the bank said it made the changes for customer “protection”.
Related: HSBC Blocks All Transactions to Crypto Exchanges Commencing 24 July
Payments Blocked on Suspicion of Connections to Crypto
HSBC Australia told Crypto News Australia it’s blocking payments if they believe they’re crypto related.
HSBC Australia continues to implement strategies to protect our customers and is now blocking payments from our bank accounts and credit cards that we reasonably believe are being made to cryptocurrency exchanges.
HSBC AustraliaHSBC referred to the Australian Competition and Consumer Commission (ACCC) which previously reported that Australians lost $171 million due to scams. The ACCC also said in its report that Australians suffered a combined loss of $2.7 billion – which includes those $171 million linked to crypto.
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The bank claimed that crypto is the preferred payment method for scammers and once funds are lost, they often can’t be recovered.
Cryptocurrencies can be quickly moved around the world anonymously, making it a preferred payment method for scammers. Unfortunately, once funds are sent to cryptocurrency exchanges, they’re often unable to be recovered, and this is why we are making these changes.
HSBC AustraliaHSBC Australia defended its block by stating to CNA that it would protect customers from significant losses.
In particular, this fraud control will help to mitigate investment scams losses, which can have devastating impacts on customers.
HSBC AustraliaCash Rules Everything Around Me – Criminals Still Prefer It Over Crypto
While it is true that some criminals use cryptocurrencies in their nefarious operations, it should be noted that transactions on most blockchains are not as untraceable as cash transactions – which is why the latter is still the number one payment method for criminals.
A report by the US Department of the Treasury in early 2024 found that the use of digital assets involved in money laundering, terrorist financing and proliferation financing is still less common than the use of cash.
Criminals use cash-based money laundering strategies in significant part because cash offers anonymity. They commonly use U.S. currency due to its wide acceptance and stability.
US Department of the TreasuryAdditionally, a 2024 study by blockchain analysis firm Chainalysis found that not only is the role of crypto in criminal activities on the decline – including scams – but the overall share of illicit use is also small.
According to their data, the 2023 crypto transaction volume associated with illicit use dropped from 0.42% to 0.34%.
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The use of cash in illicit activities is still high, especially when compared to the use of crypto. The Reserve Bank of Australia reports that the amount of cash used in illicit activities could be anywhere between 7% and 11% of all cash in circulation.
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