Commonwealth Bank’s plans to expand its cryptocurrency services delayed by regulators
What was Commonwealth Bank planning to release?
Following strong demand, Commonwealth Bank in November, 2021, announced that it will “become Australia’s first bank to offer customers the ability to buy, sell and hold crypto assets, directly through the CommBank app.”
It will allow CBA customers access to up to ten selected cryptocurrencies, including BTC, ETH, BTC Cash and LTC.
Per the CBA announcement, research from CBA has found a large number of its customers want to access crypto assets as an investment class and are already buying, selling and holding crypto assets through a variety of crypto exchanges.
CBA CEO Matt Comyn said: “The emergence and growing demand for digital currencies from customers creates both challenges and opportunities for the financial services sector, which has seen a significant number of new players and business models innovating in this area.
“We believe we can play an important role in crypto to address what’s clearly a growing customer need and provide capability, security and confidence in a crypto trading platform”.
“In looking at ways that we can support our customers, we have made the strategic decision to form an exclusive partnership in Australia with Gemini, a global leader with strong security and a track-record of serving large institutions. CBA will leverage Gemini’s crypto exchange and custody service and integrate it into the CommBank app through APIs,” he said.
Dave Abner, Global Head of Business Development, Gemini, said: “We are proud to be providing exchange and custody services to CBA as they begin to unlock access to cryptocurrency investments for many Australians. The exponential growth of digital assets internationally, coupled with Gemini’s institutional-grade security and proactive regulatory approach, positions this partnership to set a new standard for banks and financial platforms in Australia and across the globe.”
As part of its approach CBA has also partnered with Chainalysis, a global leader in blockchain data and analytics to help compliance teams monitor and mitigate the threat of crime through crypto asset exchanges.
Michael Gronager, CEO and Co-Founder, Chainalysis, said: “Financial institutions like CBA play an integral role in growing cryptocurrency adoption safely. We are thrilled to be a part of this important alliance with CBA and our partner Gemini to play a pioneering role in building trust in cryptocurrencies in the Australian market.”
What is preventing the release?
Financial regulators are currently making it difficult for CBA to expand these cryptocurrency services onto their mobile application. If they were to successfully expand, it would be an Australian first for consumers.
The Commonwealth bank’s cryptocurrency services started a pilot of the services in November of last year after which it hoped to open up to all of the users of its application, however it now appears to be moving toward a second pilot. The Australia Financial Review (AFR) reported on April 6 that the Australian Securities and Investment Commission (ASIC) has prevented them from launching.
Speaking at the Australian Financial Review Cryptocurrency Summit on April 6, ASIC commissioner Cathie Armour explained her commission’s recent focus on cryptocurrency, irrespective of arguments that it falls outside ASIC’s purview.
She exclaimed that although cryptocurrency assets are not necessarily financial products which the commission can regulate, it was concerned that “consumers may be investing in an environment where they are not afforded the same level of protection that applies to financial products and services.”
As a result, Senator Andrew Bragg (a staunch supporter of the cryptocurrency industry), fought back against ASIC’s new guidelines, stating that given cryptocurrency assets are not a financial product under Australian law, ASIC’s application of rules for financial products cannot be applied in this case.
As ASIC’s ability to truly regulate cryptocurrencies is limited, the ability of cryptocurrencies to fit within Australia’s regulatory framework is a matter for parliament. It will definitely be a “watch this space” in the coming developments, as there are serious benefits of cryptocurrency innovation being within Australia’s law and regulatory regime.