This week Commonwealth Bank of Australia (CBA) announced it was making an important change to its treatment of cryptocurrency.
From June 8th, CBA will now:
- Decline certain payments to cryptocurrency exchanges, and
- Introduce a payment hold for certain payments to cryptocurrency exchanges (up to 24hrs)
The bank went on to clarify, they will now restrict withdrawals from cryptocurrency exchanges to CommBank accounts, but individual cryptocurrency exchanges may impose their own restrictions.
CommBank has a dedicated page to answer questions about this change, although I have to say, after reading through it, it does a poor job of providing important detail. This leaves CBA customers who enjoy trading crypto with some big questions, which could be enough to see them looking elsewhere.
CBA sent an email to customers (below) that explains the company is making these changes to help you keep your accounts safe from scams and fraud. With interest in cryptocurrencies increasing, CBA says they’re seeing a growing number of customers losing funds to cryptocurrency scams.
High-profile cryptocurrencies Bitcoin and Ethereum have been around for more than a decade, while new coins pop up every day. It is fairly well understood by most that these are often speculative and the price can fluctuate rapidly.
That fluctuation is a place where the brave like to play and with a supercharged crypto economy, it is easy for these to be created, gain popularity in a matter of days, promoted on sites like Reddit. On a number of occasions, we’ve seen crypto projects turn into rug pulls where the founder(s) leave with the money and your average investor becomes the bag holders who ultimately lose their money.
In other, more general scams, customers are asked to pay into the scheme (which turns out to be a scam), using crypto.
The ACCC Targeting Scams report (PDF) revealed over $220 million was lost to scammers through cryptocurrency in 2022. CBA says their implementation of new measures is a strategy to defend against what is expected to be a significantly higher figure in the year ahead, to reduce incidences of scams and fraud.
CBA’s decision is the latest in a series of moves by Australian banks to distance themselves from cryptocurrency. In 2021, Westpac and ANZ both stopped allowing customers to buy or sell cryptocurrencies on their platforms.
The move by CBA is likely to be met with disappointment by some of the bank’s customers who have been using its platform to buy and sell cryptocurrency. However, it is also likely to be seen as a sign that the Australian banking industry is becoming increasingly cautious about cryptocurrency.
This comes at a time when the US is also cracking down on crypto exchanges.
The Securities and Exchange Commission (SEC) filed charges against two of the world’s largest crypto exchanges, Coinbase and Binance, on Tuesday, June 7, 2023. The SEC alleges that Coinbase and Binance violated securities laws by offering and selling unregistered securities.
- Coinbase: The SEC alleges that Coinbase violated the Securities Act of 1933 by offering and selling unregistered securities. The SEC alleges that Coinbase offered and sold at least 13 crypto assets that are securities, including Bitcoin, Ethereum, and Litecoin.
- Binance: The SEC alleges that Binance violated the Securities Act of 1933 and the Exchange Act of 1934 by offering and selling unregistered securities. The SEC alleges that Binance offered and sold at least 12 crypto assets that are securities, including Bitcoin, Ethereum, and Binance Coin.
What does this mean for Australian cryptocurrency investors?
CBA’s decision is likely to make it more difficult for Australian cryptocurrency investors to buy and sell cryptocurrency. However, there are still a number of other ways for Australian investors to access cryptocurrency.
Australian investors should also be aware of the risks associated with cryptocurrency investing. Cryptocurrency is a volatile asset and prices can fluctuate wildly. Investors should only invest money that they can afford to lose.
What does this mean for the future of cryptocurrency in Australia?
CBA’s decision is a setback for the cryptocurrency industry in Australia, on top of the previous decisions by other banks. Directionally this sets a tone, similar to what’s happening in the US, that crypto is not openly supported by the Australian financial system.
It is however important to remember that CBA is just one bank. There are still a number of other banks in Australia that offer cryptocurrency services.