The Australian arm of the international bank HSBC has informed customers that it has begun blocking customer payments to cryptocurrency exchanges as of July 24. HSBC becomes the latest central bank to shun the industry, citing scams as the primary reason.

New Safety Measures

'From July 24, 2024, HSBC will block payments from bank accounts and credit cards that we reasonably believe are being made to cryptocurrency exchanges, for your protection,' HSBC Australia said in a July 24 email to customers explaining its new safety measures.

The bank's message was clear: 'If you wish to pay cryptocurrency exchanges, you must make alternative arrangements.'

To support its decision, HSBC cited data from Australia's competition and consumer regulator stating that Australians lost up to $171 million from investment scams in 2023. The bank apologized for the 'inconvenient' change but stressed that its priority is ensuring customer money remains safe.

Industry-Wide Trend

HSBC's move comes about 12 months after Australia's top four banks—Commonwealth Bank, National Australia Bank, Westpac, and Australia and New Zealand Banking Group (ANZ)—took similar action.

These banks also restricted payments to cryptocurrency exchanges. Soon after, Australia's Bendigo Bank followed suit, also citing the need to protect customers from investment scams.

Concerns from the Crypto Sector

Amy-Rose Goodey, managing director of the Digital Economy Council of Australia (previously Blockchain Australia), told Cointelegraph they needed to be more informed of HSBC's decision.

'The recent decision by HSBC to block all payments to cryptocurrency exchanges has reignited concerns about the ongoing challenges facing the relationship between Australian banks and the cryptocurrency sector,' said Goodey. She added that the move wasn't isolated and reflected a 'concerning trend' of restrictions that affected the digital currency community.

'It underscores the critical need for dialogue and improved regulatory frameworks supporting innovation while effectively addressing potential risks.'

With such dialogue, Goodey said more Australians will gain the 'financial right' to participate in the growing digital economy.

Goodey added that by establishing 'clear, fair and forward-thinking regulations,' banks and industry players will be better positioned to combat these scams without slowing innovation.

She also mentioned that the association has taken steps in the right direction since last year. DECA was added to the advisory board of the National Anti-Scam Center.

Future Implications

HSBC said it would still accept customer payments from cryptocurrency exchanges and that banking would continue normally.

This move by HSBC and other central banks represents a significant shift in how financial institutions interact with cryptocurrency. As the industry grows, clear and compelling regulations become increasingly critical.