CBA’s partnership with US-based Gemini raised eyebrows with local crypto exchanges. Now they hope the deal opens the door to co-existence.

CBA’s partnership with US-based Gemini raised eyebrows with local crypto exchanges. Now they hope the deal opens the door to co-existence.
Tyler Winklevoss and Cameron Winklevoss, co-founders of the US-based crypto exchange, Gemini, were the preferred candidates for a retail partnership with CBA. Photo: Getty Images
  • Australian crypto and fintech executives were left puzzled when the Commonwealth Bank of Australia announced a partnership with US crypto exchange, Gemini, after years of denying its banking services to local players.
  • Among them was Independent Reserve CEO Adrian Przelozny, who was shocked the bank didn’t bother to broker a deal locally.
  • Even still, local executives say the deal offers hope for an expanded risk appetite among Australia’s major banks, who have long shunned the local crypto and fintech sectors.
  • Visit Business Insider Australia’s homepage for more stories.

When the Commonwealth Bank of Australia announced that it would offer its customers the opportunity to buy, hold and sell crypto assets via its app by way of a partnership with US crypto exchange, Gemini, local exchanges were left puzzled.

After having spent years forced to play contortionist at the mercy of banks only to have their services withdrawn at a moment’s notice, Australia’s crypto and fintech executives were left feeling deflated by the fact that they’d been shunned yet again.

Among them was Adrian Przelozny, CEO at Independent Reserve, one of Australia’s longest-running exchanges. He said he was surprised the bank didn’t bother to explore the options available in its own backyard. 

“I guess we were a little bit disappointed that they chose an exchange that’s overseas, and didn’t even talk to the exchanges here,” Przelozny told Business Insider Australia.

“There are a lot of exchanges in Australia that have been operating for a long time, and they have very robust offerings,” he said. “And it was a little bit disappointing that they didn’t look at the local market — they just went overseas.”

At the very least, though, Przelozny hopes the partnership could drive a wedge in global de-banking trends, and see CBA take on the accounts of other emerging market operations that have long been told they don’t match the bank’s risk appetite. 

“Hopefully it’s a step in the right direction. It’d be a bit strange for a bank to offer cryptocurrency themselves, and then not allow cryptocurrency exchanges to be one of their own customers because cryptocurrencies are too risky or too volatile,” Przelozny said. 

“That would seem a little bit strange to me.”

When asked whether CBA had accounts or partnerships with any other crypto exchanges, a spokesperson for the bank pointed to the Gemini announcement, and declined to comment on whether it would consider extending its services to others.

Each of the major banks have conservative track records on crypto, even though some, like Westpac, have a vested interest in the crypto industry beyond the bounds of their traditional retail operations.

It’s a years-long fracas that most recently drifted into the crosshairs of a Senate committee, led by Liberal senator Andrew Bragg, who was charged with reviewing how Australian policymakers could better accommodate the asset class, and the industry it brings with it.

In its final report, delivered late last month, the bipartisan Senate Select Committee on Financial Technology and Regulatory Technology said the antagonism directed at crypto exchanges by the banks risks driving a growing crop of local operators offshore. 

FinTech Australia, in its submission to the report, said fintechs and digital currency exchanges, both locally grown and looking to expand into Australia, have long been at the mercy and whims of major banks. 

“It is not an anomaly; it is a pattern, and it occurs with opaque and dismissive reasoning from the bank. Fintechs who have been affected are afraid to speak out for fear of further alienation,” the industry body wrote. 

“This issue, if left unaddressed, will undermine the future of the fintech industry and result in a severe reduction in the number of operating companies. A resolution is critical to the future state of the fintech industry.”

At Binance Australia, the feeling isn’t much different. Leigh Travers, the company’s chief executive, told Business Insider Australia that de-banking is something he’s been dealing with his entire career.

What’s changed now, he says, is that fintech outfits are emerging in market with product offerings more aligned with where Travers and his team see the future of the exchange, and they’re delivering on them with slashed margins. 

“There’s probably a bigger opportunity for us with some of the fintechs in Australia that are happy to move quite quickly, and really prioritise getting access to low cost products, rather than the most secure and sort of synthetic product, if you will, and still charging a really high fee.”

The strategy, saw the exchange build out an integration in partnership with financial management app, WeMoney, which allows customers to view multiple bank accounts, investment portfolios and broad based liabilities in a single interface.

But for businesses on the other side of the coin, tenable alternatives are in short supply. For Wise, formerly Transferwise, CBA’s decision to step into crypto was one that landed with a twist of irony, after locking out businesses like theirs for years.

Tristan Dakin, Australian country manager at Wise, told Business Insider Australia that the move represented “the banks having their cake and eating it, too.”

“From our perspective, you know, we have a limited ADI licence, we’re regulated, we have to adhere to the same sort of regulatory requirements as a big bank does in Australia — especially around anti-money laundering reporting — we’re regulated by AUSTRAC, ASIC and APRA,” Dakin said. 

“So to be told that they don’t have the risk appetite to bank with us, is a strange one, made weirder that they would then have no issues with partnering with a US crypto trading firm to offer crypto to their end users when it’s a completely unregulated asset.”

Like Przelozny at Independent Reserve, Dakin hasn’t lost all hope that the banks will adjust their risk tolerance, even though he thinks the issue is more potent in Australia than it is anywhere else in the world. 

“I would be hopeful that perhaps this signals a change in risk appetite for banks in Australia, Dakin said. “We have a budding fintech industry here, but one of the main blockers to entry is the provision of banking infrastructure for firms, especially in the early days of a startup.”

“Maybe I’ll give CommBank a call and see if they want to partner with us.”