One of the world’s largest crypto-currency exchanges is seeking an urgent explanation from Commonwealth Bank for a decision to block payments from customer bank accounts to the crypto provider’s digital platform.
A CBA customer alerted Banking Day to the issue after the bank rejected his attempts to transact with the global trading exchange, Crypto.com.
The customer said CBA’s call centre staff confirmed that payments to Crypto.com could not be completed through the bank and that he was told to look for another provider if he wanted to buy and sell crypto-currencies.
“She told me that the bank blocked transactions with some merchants and that payment requests for Crypto.com were being declined,” the CBA customer said.
“I was told that the bank did not block all crypto exchanges and was advised to look for another provider.”
A CBA spokesperson said that the bank had a policy since 2019 of blocking credit card holders from accessing virtual currency providers but declined to comment on why call centre staff had advised the customer to find an alternative platform to Crypto.com.
The bank’s advice to the customer has riled Crypto.com’s local management who are concerned that it could potentially amount to anti-competitive conduct.
CBA is preparing to market crypto trading to Australian banking customers after acquiring a strategic stake last week in US-based platform, Gemini.
The bank estimates that around 500,000 existing accountholders are already engaged in trading of alternative currencies.
Karl Mohan, the general manager of Crypto.com’s Asia Pacific operations said he was disappointed with the bank’s action.
“It would be upsetting if our business has been singled out,” he said.
“It’s rather rich of them to block our customers’ transactions because we are one of the few crypto exchanges in the country with an Australian Financial Services Licence.
“I will definitely be ringing the bank to find out more about this.”
Mohan said he found it hard to understand why CBA staff were advising staff to find alternatives to Crypto.com.
“It’s hard to fathom – we are very focused on consumers and we have a brand to protect,” he said.
Crypto.com has ramped up its marketing pitch to Australian traders in the last month through an expensive television advertising campaign that leverages Hollywood actor, Matt Damon.
The brand-build program is part of an international campaign to raise the profile of the company.
Last week Crypto.com also negotiated a US$700 million deal to acquire the naming rights for the next 20 years to the Los Angeles Lakers home stadium.
According to an analysis of the global crypto-currency market by Coinbase, Crypto.com is one of the fastest growing spot trading platforms in the world.
Crypto.com, which is headquartered in Singapore, was found by Coinbase to offer “competitive execution rates” and “low fees”.
Leading Australian risk expert Dr Patrick McConnell believes CBA’s decision to buy into the Gemini business raises potential risk management issues for the bank, including the possibility of a conflict of interest.
In a social media post this week, McConnell raised concerns about CBA’s decision to partner with Gemini.
“Does CBA know that the owners of Gemini – the Winklevoss twins – are some of the biggest owners of Bitcoin,” McConnell asked.
“So, they would, at the very least, have a desire to see the Bitcoin price keep rising.
“I’m not suggesting they would act on that though.”
McConnell also questioned whether the CBA’s board risk committee had signed off on the operational conduct risks created by the Gemini partnership.