CBA cautious on crypto after FTX collapse

Chief executive Matt Comyn says the collapse of FTX will trigger more scrutiny and regulation of the entire crypto sector, as the bank takes a cautious approach.

CBA CEO Matt Comyn is treading cautiously on crypto markets. Picture: Damian Shaw/NCA NewsWire

Commonwealth Bank boss Matt Comyn says the collapse of cryptocurrency platform FTX will trigger more scrutiny and regulation of the entire sector, as the nation’s biggest bank takes a cautious approach to potential crypto trading via its platforms.

Almost 30,000 local FTX users are entangled in the company’s demise and are locked out of their accounts after it collapsed into administration.

KordaMentha – called in on Friday by FTX founder Sam Bankman-Fried – are yet to finalise how much money is owed by the company, and the events mark the latest blow to confidence in the volatile sector.

Commenting on the crisis, Mr Comyn said: “The latest significant collapse will bring further scrutiny, inevitably regulation and transparency, and obviously we are supportive of that in the interests of improving and strengthening customer protection.”

CBA has been in prolonged negotiations with the corporate regulator over a move to offer its customers crypto trading services.

A year ago, the bank made a small minority investment in regulated crypto exchange and custodians, Gemini, as it participated in the firm’s first ever equity raise.

The investment followed CBA’s announcement that it would offer customers the ability to buy, sell and hold crypto assets, directly through the CommBank app, leveraging Gemini’s platforms. Despite a pilot, that is yet to start.

Asked about deliberations and regulatory engagement on that project, Mr Comyn would not confirm if the move was still being actively worked on.

“We continue to adopt a cautious approach,” he said in an interview. “We’ve had a lot of engagement which we’ve found to be very useful and constructive with regulators.

“As we have seen for some time it’s an area where there is enormous interest and investment, from both Australians and clearly around the world … recent events highlight not only the volatility but also the risks in a sector which globally I think has been very challenging to regulate.”

Mr Comyn said CBA was “interested and exploring” options to provide crypto services, but was “very cautious” about what it would offer customers and when.

“Not specific to anything in particular with ASIC (the Australian Securities and Investments Commission), it’s (crypto) certainly been an area of interest for us,” he added.

“We’re maintaining that cautious approach. It’s clearly been a very eventful period and year for the broader industry, and it’s something we’ll continue to watch closely.”

Other major banks haven’t followed CBA into assessing crypto trading services for customers. ANZ has, however, undertaken transactions via its stablecoin, a digital currency pegged to the Australian dollar.

ANZ in March said it executed the first local bank-issued Australian dollar stablecoin payment.

ASIC chair Joe Longo has repeatedly warned consumers about the risks of investing in cryptocurrencies, given often they aren’t well understood.

A year ago, when commenting on CBA’s crypto proposal Mr Longo said: “It’s only a pilot project, but the overall direction is clear; the debate is no longer on the fringes of the financial services industry.

“Those here who are directly involved in the broader managed investments sector will understand the serious implications of investing without understanding.”

Three months ago, Mr Longo cautioned crypto assets were “highly volatile, inherently risky, and complex”.

The prudential regulator in April set out initial risk management expectations for entities that engage in crypto asset-related activities.

Originally published as CBA cautious on crypto after FTX collapse