coinculture.com
Key Takeaways:
- Australia’s largest bank has paused the launch of cryptocurrency trading through its app due to market turmoil and uncertainty.
- The federal Treasury is consulting on regulation around cryptocurrency, with submissions open until 27 May
In November, Commonwealth Bank announced plans to allow customers to buy and sell cryptocurrency through its app. Customers would be able to purchase up to ten crypto assets under the plan, including bitcoin, Ethereum, and Litecoin.
The bank had planned an initial pilot before “progressively [rolling out] more features to more customers in 2022”.
However, Guardian Australia has confirmed that the rollout has been paused, with no time set on when it will resume. Those who participated in the initial pilot have been unable to trade cryptocurrency through the app.
The Commonwealth Bank’s chief executive, Matt Comyn, stated that the company was reviewing customer feedback but that more regulation would be required before moving forwards.
“As events of the last week have reinforced, it is clearly a very volatile sector that remains an enormous amount of interest. But alongside that volatility and awareness and I guess the scale, certainly globally, you can see there is a lot of interest from regulators and people thinking about the best way to regulate that,” he said in a tech briefing this week.
The Federal Treasury is consulting on regulation around cryptocurrency, with submissions open until 27 May. Comyn stated that the post-election government would focus on “how to most appropriately regulate the sector.”
“We want to continue to play a leading role in providing input into that and shaping the most appropriate regulatory outcome,” he said. “Our intention still, at this stage is to restart the pilot, but there is still a couple of things that we want to work through on a regulatory front to make sure that that is most appropriate.”
The cryptocurrency market is in turmoil. Stablecoin Terra collapsed last month, causing an effective crypto crash that wiped between 15% and 25% off the value of most major cryptocurrencies.
According to Dr Dimitrios Salampasis, a lecturer in fintech leadership and entrepreneurship at Swinburne University, large incumbents like CBA are concerned about the potential reputational damage from association with crypto. He stated that it was all about risk balancing and that CBA would continue to work on it in the background in order to maintain afirst-mover advantage.
“The cautionary tone is also a signal to investors, shareholders and ecosystem stakeholders, since the perceived inbound and outbound risk for CBA is probably higher after embarking on such a journey,” he said. “I do not believe that the project – at least for now – is stalled. But balancing risk, brand equity and regulatory clarity will be key so as to minimise disruption in CBA’s current business model.”
The crypto crash may also call into question a recent $25 million deal announced in January between cryptocurrency exchange platform Crypto.com and the Australian Football League. The five-year agreement gives Crypto.com exclusive naming rights to the AFL Score Review during premiership and final series matches.
The AFL declined to comment on the agreement, stating that it does not discuss commercial partnerships. A spokesperson for Crypto.com wouldn’t say whether the deal was paid in cash or cryptocurrency but stated that the company was still committed to the partnership.
“Crypto.com remains fully committed to its sports sponsorships. We are well-financed, and these are multiyear contracts, which will continue to play a crucial role in our mission to accelerate the world’s transition to cryptocurrency.”
More about Commonwealth Bank’s crypto trading app
Partnering with leading global crypto exchange and custodian Gemini and leading blockchain analysis firm Chainalysis, Commonwealth Bank’s pilot program will provide customers with access to ten cryptocurrencies, including Bitcoin, Ether, Bitcoin Cash, and Litecoin. Further features are expected to be released throughout 2022. Gemini, based in New York, will assist the bank in integrating the crypto wallet into the existing CommBank app, while Chainalysis will assist the bank in monitoring and mitigating any illegal activity that may occur on cryptocurrency exchanges.
“It just shows that the industry is really maturing,” says Blake Cassidy, CEO of Australian microinvestments firm Bamboo. “There used to be a time not too long ago when we thought the banks saw crypto as competition, but now they’re embracing it. And that’s what’s really going to allow us to continue to innovate and grow this industry as bigger groups get involved and start to embrace it like we have for many years.”
Despite the fact that the move is widely regarded as a positive step for the Australian crypto industry, CommBank has been chastised for partnering with international exchange Gemini rather than a local exchange. Cassidy, on the other hand, understands why the bank might have chosen to look overseas for the partnership.
“First of all, big kudos to Gemini. They’re building the infrastructure of tomorrow to allow all financial institutions to be able to offer their customers products,” he said. “So, it’s obviously working; they’re positioned well and they’re getting massive banks using their services. Second, I just don’t think we have that infrastructure or the maturity in our industry here yet.”
The move comes after the release of a Senate committee report that looked into, among other things, the issue of the de-banking of many crypto businesses in the country by the Australian banking sector — including CommBank. The report recommended that the Australian government develop clear processes for de-banked businesses, centred on the Australian Financial Complaints Authority. This recommendation echoed the position of committee chairman Senator Andrew Bragg, who maintained throughout the reporting process that, while de-banking was a serious issue in the country, the government should not tell banks who they should do business with.