Commonwealth Bank's plans to expand crypto services to 6.5 million users delayed by red tape

Financial regulators are blocking the Commonwealth Bank of Australia (CBA) mobile app from extending encrypted services. In Australia, the bank aims to grant all of its 6.5 million users access to cryptocurrency services.

Late last year, CBA's encryption product began a pilot of the service, which it then hopes to make available to all users of its app, but it now appears to be moving towards a second pilot. The Australian Financial Review (AFR) reported on April 6 that the Australian Securities and Investments Commission (ASIC) had restricted the rollout with red tape.

ASIC objected to the introduction of consumer protections based on target markets and product disclosure. CBA has been working with ASIC and several other regulators within the Australian Government to roll out these services.

At the Australian Financial Review’s Crypto Summit on April 6, ASIC Commissioner Cathie Armor explained her committee’s recent focus on cryptocurrencies, despite arguments that it fell outside ASIC’s remit. She said that while crypto assets are not necessarily financial products that the Commission can regulate, it is concerned that:

"Consumers may be investing in an environment where they do not have access to the same level of protection that applies to financial products and services."

In pushing back against ASIC's new guidelines banning much of the work done by financial influencers, government senator Andrew Bragg said ASIC's application of financial product rules could not apply to crypto assets because cryptocurrencies are not financial products under Australian law.

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In her speech, Armor commented that ASIC's ability to truly regulate crypto assets "depends on their compliance with the legal framework for financial products and services", which she said was "a matter for Parliament".

Armor added that she saw "a real benefit of innovation in our regulatory regime", but warned: "There are a lot of rules out there to follow."

"There are a lot of rules out there for you to follow."

In November, CBA caused a stir when it announced its intention to launch crypto services, as it was the first of the country’s “big four” banks to do so. Blockchain Australia CEO Steve Vallas told Cointelegraph that the move will be “very significant.”

To make the product a reality, CBA partnered with offshore cryptocurrency exchange Gemini and blockchain analysis firm Chainalysis. Once fully launched, the offering will include Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH) and Litecoin (LTC).