Last month, the Commonwealth Bank of Australia (CBA) became the first in Australia to offer crypto to its customers. Now the country’s largest bank is moving to offer customers the ability to earn interest on their crypto.
CBA Leans on Gemini for Crypto
In addition to partnering with Gemini for its crypto offering, CBA also recently invested in the exchange’s first external fund raise, suggesting that the relationship went a lot deeper than initially suspected.
Now, according to a report by The Australian, CBA and the New York-based crypto services provider are planning to launch a “crypto interest account” to Australian customers whereby they would receive a fixed interest rate for lending their digital assets into the broader market.
Speaking about the Australian market, Andy Meehan, chief compliance officer for Gemini Asia Pacific, suggested that:
We think CBA broke the mould in your market, which is an attractive market – in fact is it a highly developed investment market that has a long tradition of people being very quick to take up new finance technology when it arrives on the scene.
Andy Meehan, chief compliance officer, Gemini Asia Pacific
He went on to say:
CBA has forced the regulators to move much faster than they might have naturally desired, but you’ll see every one of your banks offer crypto services very soon.
Andy Meehan, chief compliance officer, Gemini Asia Pacific
CBA, the First Domino to Fall?
With most Australian banks offering negative real interest rates on savings, investors are becoming increasingly drawn to alternative investments such as crypto.
CBA has been a trailblazer in the space and competitors are no doubt working behind the scenes to catch up. CBA chief executive Matt Comyn recently told Bloomberg that banks needed to be involved in the adoption of technology underpinning crypto and the insatiable demand from customers to trade them. He was also quoted as saying “we [CBA] see risks in participating, but we see bigger risks in not participating”.
It remains to be seen how the regulators will respond to CBA’s crypto interest product. Presumably they will draw guidance from Gemini itself, which as a New York-registered exchange is one of the most heavily regulated entities in the space. If it aligns with Gemini’s offshore product, you’d expect depositors’ crypto to be lent to institutional investors and for the customer to receive different rates for different cryptos, depending largely on the demand and use of such digital assets.
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