ASB appears to have no plans to immediately follow its parent, Commonwealth Bank of Australia (CBA), by offering customers the option of buying, selling and holding cryptocurrencies via its app.
CBA announced on Wednesday that it's to be the first Aussie bank to provide the option of buying, selling and holding cryptocurrencies through its CommBank app.
Like their Aussie counterparts New Zealand banks have also given cryptocurrencies a wide berth to date, with none of the big five having exposure to cryptocurrencies. And ASB doesn't appear set to immediately follow CBA's move.
"ASB is monitoring market developments and will continue to review our position on crypto-related opportunities," an ASB spokeswoman told interest.co.nz.
CBA is partnering with crypto exchange and custodian, Gemini, and blockchain analysis firm, Chainalysis, to design a crypto exchange and custody service to be offered to customers through a new feature in the bank's app.
"The pilot will start in the coming weeks and CBA intends to progressively rollout more features to more customers in 2022. CBA will provide customers with access to up to 10 selected crypto assets including Bitcoin, Ethereum, Bitcoin Cash and Litecoin," CBA says.
"Research from CBA has found a large number of its customers want to access crypto assets as an investment class and are already buying, selling and holding crypto assets through a variety of crypto exchanges."
In the bank's statement, CBA CEO Matt Comyn says the emergence and growing demand for digital currencies from customers creates both challenges and opportunities for the financial services sector, where there are a significant number of new entities and business models emerging.
“We believe we can play an important role in crypto to address what’s clearly a growing customer need and provide capability, security and confidence in a crypto trading platform,” says Comyn.
“In looking at ways that we can support our customers, we have made the strategic decision to form an exclusive partnership in Australia with Gemini, a global leader with strong security and a track-record of serving large institutions. CBA will leverage Gemini’s crypto exchange and custody service and integrate it into the CommBank app through APIs,” Comyn says.
"Customers have expressed concern regarding some of the crypto services in market today, including the friction of using third party exchanges, the risk of fraud, and the lack of trust in some new providers. This is why we see this as an opportunity to bring a trusted and secure experience for our customers."
Meanwhile, banks looking to hold cryptocurrencies on their balance sheet might soon find that doing so is pricey. In June the Basel Committee on Banking Supervision, the key global standard setter for the prudential regulation of banks, proposed introducing capital and liquidity requirements for banks' exposure to cryptocurrencies.
Although the Basel Committee's proposals would bring cryptocurrencies such as Bitcoin further into the mainstream financial world, they'd also make it very costly for banks to hold them on their balance sheets. That's because the Basel Committee proposes applying a huge 1250% risk weight to a bank's exposure to cryptocurrencies.
The Basel Committee says a $100 exposure would give rise to risk weighted assets of $1250. When multiplied by the minimum capital requirement of 8%, this results in a minimum capital requirement of $100, or the same value of the original exposure.
"In other words, the capital will be sufficient to absorb a full write-off of the crypto asset exposures without exposing depositors and other senior creditors of the banks to a loss. The application of a 1250% risk weight to an asset is similar in effect to the deduction of the asset from capital. Unlike a deduction, however, a risk weight approach can also be applied to short positions, where there may be no balance sheet asset to deduct," the Basel Committee says.
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26 Comments
The Basel Committee says a $100 exposure would give rise to risk weighted assets of $1250. When multiplied by the minimum capital requirement of 8%, this results in a minimum capital requirement of $100, or the same value of the original exposure.
In other words, Basel is saying Crypto can go to ZERO with no salvageable value.
Pretty well thanks Frazz, The problem with inflation at the moment is anyone living mortgage free is watching their total net worth go to the moon. So basically my house went up $40K in a single month. This has arguably a really bad effect on people because then they don't give a s**t about the price of their milk going up 50 cents and they don't care about Bitcoin either.. There are some really really bad distortions in the market currently and many people must literally be in tears. I wake up every morning and thank God I'm one of the lucky ones and I'm not even religious. Spare a thought for those far less fortunate than me Frazz.
The current market as you describe is self destructing - and yes I do care about the average Joe which includes me, so luckily we have a hard money answer (BTC). Some will miss out in this change so we will need to help them out.
Here is a good interview with Lawrence Lepard ...you might come around one day and take your blinkers off
Indeed. You can copy Bitcoins’s codebase from GitHub, and create a new blockchain anytime you want. Likewise you can build a s***coin on top of Ethereum with minimal to no software engineering skills. So what? They’re networks. You could likewise create new internet protocols or social media apps. But it wouldn’t be worth anything, because nobody is going to use your pointless clone of TCP/IP or Facebook. That doesn’t mean the protocols and apps which do get users aren’t worth trillions. What you’re saying is nonsense.
That's true for you of your home that you live in. But if you have an investment property, then you can't live in two places at once. There are plenty of places (Italy, Detroit etc) where you could get homes essentially free, because their 'value' as places for people to live was worth less than the cost of holding the property for the owner.
No Banks now understand that there is now enough volume trading in dollar terms making it worthwhile for them to get in on the Bitcoin action and "Clip the ticket" in the transaction fees. As long as it doesn't crash to zero they make money on the way up AND on the way down. Sounds like the usual "Banking" practice to me.
This is all superficial. CBA is simply trying to look hip and relevant. They have no place in the crypto space. It's not their space. As for ASB, they're basically mortgage lenders, not a crypto exchange. They don't belong in the space because it's antithetical to what they stand for and represent as a business. They should stick to the property bubble. That's their bread and butter. There are (and will be) far better solutions for people who want exposure to crypto.
Well that's beside the point. My own crypto holdings are just as secure as what the CBA is proposing. Furthermore, my holdings earn interest if I want them to and accept the risk (a natural element in a free market). If CBA pays interest on customer's crypto holdings, they will also be cannabilizing their own fiat-based products.
So we have all the Money Laundering requirements on Banks questioning money coming into accounts. But we are bring the favourite currency of Hackers, Extortionists, Criminals, Terrorists plus the odd Millennial Investor into the fold. The only guy with the guts to call this nonsense is President Xi. Most other world leaders are patsies on this issue.
Smart move by Banks to get into the Crypto space. It may reduce the anonymity of transactions and pave the way for Cryptos to become more main street. Also bring a portion of them under Central Bank regulations. In the future, the Banks will be better placed to handle the CBDCs. It will also give the Banks a leg up in learning, establishing and integrating higher technology. US Banks are already there.
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