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Commonwealth Bank shareholders have expressed fresh doubts over the lender’s plan to allow customers to trade bitcoin and other cryptocurrencies on its app, as financial markets and the wider industry reel from the collapse of the FTX crypto exchange.
In November last year CBA became the first Australian bank to announce a pilot program allowing customers to trade cryptocurrencies through its app, citing a surge in demand from younger customers. Since then, cryptocurrency prices have tanked as interest rates have risen, and the collapse of crypto exchange FTX has shaken confidence in the sector.
CBA’s crypto pilot, which intended to allow customers to trade a small number of cryptocurrencies, was paused this year amid concerns from regulators.Credit:Michael Clayton-Jones
The implosion of Bahamas-based FTX, which went from being a US$32 billion company to worthless, has raised questions about the financial strength of other exchanges, and underlined the high risks in the sector.
CBA’s crypto pilot, which intended to allow customers to trade a small number of cryptocurrencies, was paused this year amid concerns from regulators. The bank had hoped to roll out more crypto features in 2022, but this window is closing fast.
CBA chief executive Matt Comyn last week told the Australian Financial Review CBA had a “cautious approach to the sector” but did not rule out proceeding with the product.
Investors, however said the product could increase regulatory risks and also raised the potential for damage to the bank’s reputation.
Chief investment officer at Atlas Funds Management, Hugh Dive said he would be “extremely surprised” if the bank ended up offering crypto trading to its customers. “From a CBA shareholder point of view, does it move the needle? No. Does it raise the risks? Yes. A small movement in their lending margin will outweigh any profits they will make from this.”
Portfolio manager at Regal Funds Management, Mark Nathan, said it was possible CBA may end up deciding not to move into crypto after all, given the regulatory concerns in the area. Whether the bank ended up offering crypto trading services or not, he did not think the issue was important for its earnings outlook over the next five to ten years.
“I don’t think anybody ever expected the bank to be making money from crypto trading. It’s more about appealing to a younger demographic,” Nathan said.