Westpac is upping the stakes to understand how it might interact with cryptocurrencies in future, revealing an investment in bitcoin wallet Coinbase.
The investment – the amount of which remains undisclosed – was made through Reinventure, an Australian venture capital firm whose largest source of funding is Westpac.
“One of Reinventure’s primary objectives is to create opportunities between its portfolio companies and Westpac, Reinventure’s largest investor and one of the top 15 largest banks in the world,” Coinbase said in a blog post.
“We plan to work closely with Reinventure and share insights into the use of digital currencies globally.”
A Reinventure spokesperson confirmed the investment to Information Age, outlining some of the reasons it had taken an interest in Coinbase.
“Coinbase is the leading player in the bitcoin market globally with more than 2.2 million users and 39,000 merchants,” the spokesperson said.
“Its mission is to be the most trusted bitcoin company in the world and it is investing heavily in next generation security.”
Westpac declined to comment on the motivations underpinning its interest in Coinbase.
However, the bank has been actively working with fintech startups over the past couple of years as it seeks to understand digitally disruptive business models in the banking sector.
Gaining an inside line on the likes of Coinbase could provide Westpac with valuable insight into the risk profiles of such digital currency operators and the technology they use.
Westpac – and other Big 4 banks – have been in the spotlight in recent weeks as trials involving open source currency exchange Ripple are made public.
“Internally, Commonwealth Bank has been testing crypto protocols and we are about to begin a wider experiment with one of our offshore subsidiaries to explore the benefits of intrabank transfers using these protocols,” a CBA spokesperson told Information Age.
“The idea is to test in a controlled environment what a bank-to-bank internal transfer might look like using crypto rather than existing payment providers.
“We are ensuring our testing remains internal within Commonwealth Bank Group and we continue to comply with all legal and regulatory requirements.”
Of the Big 4, only NAB is staying out of the digital currency space for now, recently telling the Australian Financial Review that "it does not trade in unregulated currencies."