Australian Banking Supervisors Examine Implications Of Crypto Trading At CBA For Their Banking System

CBA implements crypto trading for customers in Australia. (photo: doc. unsplash)

JAKARTA – Australia's banking watchdog said it was examining the regulatory implications of the Commonwealth Bank of Australia's (CBA) plan to introduce bitcoin trading to unsophisticated retail investors. CBA is the first bank in Australia to do this to its customers.

The CBA said it would welcome a clear regulatory framework for cryptocurrencies, which so far have not been formally regulated in Australia.

On Wednesday, November 3, CBA cracked the banking industry rankings to match offerings from fintech companies by announcing that they would be the first major bank in the developed world to offer a platform for retail customers to trade cryptocurrencies.

The move forced financial watchdogs in Australia to immediately focus on the $2 trillion crypto trading industry that many says has no intrinsic value and relies on users' complete trust in different types of software.

A spokesman for the Australian Prudential Regulatory Authority (APRA) told Reuters the country's biggest lender had notified regulators of its plans. Now Australian authorities are "looking into the regulatory issues this has created".

After a phased trial of 2.000 people, CBA will provide easy access to crypto trading across 10 assets to about a third of Australian adults who already use its industry-leading mobile banking app.

CBA's crypto trading services will be provided in partnership with Gemini Trust Company, one of the world's largest crypto exchanges created in 2014 by the Winklevoss Brothers, who have been notorious for accusing the Facebook founder of stealing their idea.

Anti-money laundering watchdog Australian Transaction Reports and Analysis Center said it was "involved ... in relation to this new product offering" with CBA and Gemini.

CBA said it would welcome regulatory clarity in cyberspace, and that its products were designed with risk mitigation and regulatory issues at the forefront of mind both for banks and to ensure people feel safe when using the product.

"We would really welcome regulatory clarity for crypto assets. We think it will improve the market, increase trust, and it will raise the bar when it comes to customer protection," said Sophie Gilder, Commonwealth Bank's Blockchain head and project leader for the bank.

CBA's offering will be a "closed-loop" linked to CBA's bank account, which will be monitored with the cryptocurrency anti-money-laundering service from Chainalysis for any potential suspicious activity.

"We have complete transparency on customer activity and can report it to regulators when needed," said Gilder, which includes custom reporting to tax authorities.

"As soon as the trial ends, We won't be opening it up to everyone. But only on a limited basis. It will be a more gradual process than that, which I think is appropriate, given the volatility of crypto," Gilder added.