Top Australian Bank Ceases Crypto Pilot Amid Market Downturn: Report

key takeaways

Despite an “overwhelmingly positive” reception of the app’s crypto feature, CBA has walked back its decision, citing volatility following Terra’s collapse
The bank had previously partnered with Gemini and Chainalysis to integrate its services to the bank’s native app

Australia’s largest bank by total assets has shuttered the rollout of a pilot that had briefly allowed select users to make in-app crypto purchases.

According to a report by The Guardian on Thursday, the Commonwealth Bank (CBA) has decided to pause the pilot and has given no timeframe for when the program will resume.

The bank became the first major financial institution in the country to allow certain customers to make in-app purchases through the CommBank banking app in November. Customers had previously been allowed to make purchases of up to ten cryptocurrencies, including bitcoin and ether.

As part of the project, CBA partnered with Gemini to leverage its crypto exchange and custody service which was integrated into the app via APIs. Blockchain analytics firm Chainalysis also participated in the project, offering to assist the bank’s compliance teams monitoring for crypto crime.

Despite the pilot’s “overwhelmingly positive” reception and popularity, current market woes – including the disruption caused by Terra last week – have formed a major part of the bank’s decision to halt its crypto services.

Blockworks attempted to contact Chainalysis, Gemini and CBA but did not receive a reply by press time.

“We want to continue to play a leading role in providing input into that and shaping the most appropriate regulatory outcome,” CBA’s chief Matt Comyn said in the report. “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.”

Comyn said at the time of the pilot’s launch that he believed his institution would play an “important role” in a bid to meet growing demand from roughly 900,000 customers keen to invest in the nascent asset class.

Australia is slowly driving forward with its crypto regulation having proposed legislation to introduce a licensing regime as well as measures relating to custody, decentralized autonomous organizations (DAOs) and taxation. Given the country’s federal election on Friday – which may decide on an entirely new government – regulation for the budding market could very well be thrown into doubt.

Some regulators are attempting to head the matter off having issued guidance to businesses dealing with crypto assets late last month. Two weeks earlier, chair of the Australian Prudential Regulation Authority Wayne Byres also cautioned banks to proceed with care – despite crypto not being the only industry to be suffering headwinds caused by economies worldwide grinding to a halt.

Global equities markets continue to face significant sell-side pressure caused by macroeconomic factors including rising inflation and lifting of interest rates designed to combat it. Crypto has been unable to avoid that contagion having suffered significant sell-offs in recent months.

“As events of the last week have reinforced, it is clearly a very volatile sector that remains an enormous amount of interest,” Comyn said referencing the fallout from the Terra saga. “But alongside that volatility…you can see there is a lot of interest from regulators and people thinking about the best way to regulate that.”

Get the news in your inbox. Explore Blockworks newsletters:

The Breakdown: Decoding crypto and the markets. Daily.
Empire: Crypto news and analysis to start your day.
Forward Guidance: The intersection of crypto, macro and policy.
0xResearch: Alpha directly in your inbox.
Lightspeed: All things Solana.
The Drop: Apps, games, memes and more.
Supply Shock: Bitcoin, bitcoin, bitcoin.