Commonwealth Bank of Australia suspends cryptocurrency trading pilot as regulators hesitate

The Commonwealth Bank of Australia (CBA) has put on hold indefinitely a second round of its cryptocurrency trading service pilot program and cut off access to the first round of testing.

The CBA sent Cointelegraph a transcript of Tuesday’s bank briefing, in which CEO Matt Comyn said he was still awaiting clarity from the regulator. He also said he was "working very closely with some of the regulators, as you would imagine, on the appropriate handling of this particular product."

"At this stage, our intention remains to restart the pilot, but there are still some things that we want to address on the regulatory front to ensure this is the most appropriate."

Comyn said the Ministry of Finance had submitted a document on the plan, but he did not disclose an expected timeline for its completion.

Comyn said that while the second pilot program had already been put on hold by April due to financial regulators’ reluctance to allow ordinary bank users to easily access cryptocurrencies, wild volatility in the crypto market last week appeared to further support the need for an extended hold. The Australian Securities and Investments Commission (ASIC) objected to CBA's services, citing a lack of consumer protection.

"It's obviously a very volatile industry, but there's still a lot of investor interest," he said.

"But beyond that volatility and awareness, I guess it's definitely a global scale, where you can see regulators and people interested in the best way to regulate."

Comyn also hinted that banks are awaiting the results of Saturday's federal election. Should a new regime come to power, it could mean widespread changes to the crypto regulatory landscape. Comyn said this "will be a priority for the incoming government."

Dr Dimitrios Salampasis, a lecturer in leadership and entrepreneurship at Swinburne University, told the Guardian the CBA may slow down to prevent reputational damage.

Considering the recent collapse of Terra (LUNA) which has caused prices to plummet in the cryptocurrency market, Dr Slampasis said: “Balancing risk, brand value and regulatory transparency will be key in order to minimize disruption to CBA’s current business model.”

In November last year, CBA was the first major bank in Australia to offer crypto services through a mobile app. As the pilot project progresses, it has promised that the app's 6.5 million users will gain access once it is fully rolled out. As of now, those plans are on indefinite hold.

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