Australia will create a licencing framework for cryptocurrency exchanges and consider launching a retail central bank digital currency as part of the biggest overhaul of its A$650 billion-a-day ($463 billion) payments industry in a quarter of a century
There has been a proliferation of product offerings from the Australian blockchain and cryptocurrency community, and the Australian approach to the sector has broadly remained supportive of new and innovative financial services and products using or transacting cryptocurrencies. In part, the expansion of the sector in Australia has been led by businesses in the payments, crypto asset, lending, investment and custodial services spaces.
The use of cryptocurrency and non-cash payments has exploded in Australia during the pandemic as people’s lives shifted online. About 55 million non-cash payments are made in Australia every day, according to government data, with almost half the population using their phones to make payments. The number of Australians transacting in cryptocurrency has surged 63% so far this year, compared with last year.
Treasurer Josh Frydenberg confirmed the Commonwealth and Reserve Bank were now working on the feasibility of a central crypt. The government would begin consultation in early 2022 on establishing a licencing framework for digital exchanges, allowing the purchase and sale of crypto assets by consumers in a regulated environment.
The government would also consult on regulating businesses that hold crypto assets on behalf of consumers, and on the feasibility of a central bank digital currency,
The government wanted cryptocurrency exchanges and businesses to apply for financial licences, Mr Frydenberg said, to “give consumers a little bit more certainty and confidence about the parties that they’re dealing with.”
More than 800,000 Australians have owned cryptocurrency at least once, since the rise of digital currencies over the past decade. Criminal enterprises have been drawn to Bitcoin, because of its anonymity.
Proposed new regulations
Firms that buy and sell cryptocurrencies will have to be licensed to bring safety and security to users, the treasurer said. The government will also work out a licensing plan for crypto exchanges next year, the Australian Financial Review reported.
While the Government has not significantly intervened in cryptocurrencies and related activities, there has been general clarification of the application of Australian regulatory regimes to the sector. For example, since 2018, digital currencies have been caught by Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime.
As well as in payments, there has been a growing expectation that crypto assets (including cryptocurrencies) will become accepted as an investment asset class. In June 2021, Australia’s primary corporate, markets, consumer credit and financial services regulator, the Australian Securities and Investments Commission (ASIC), launched a consultation process on its proposals to clarify expectations for crypto assets that form part of the underlying assets of exchange-traded products (ETPs) and other investment products.
Gerard Brody, chief executive of the Consumer Action Law Centre, said regulating crypto exchanges would recognise those entities “are now holding significant sums of peoples’ money and investments”. Regulating BNPL companies would “address the significant risk of debt and financial stress associated with these products,” Brody added in a statement
Source: Gilbert and Tobin Lawyers: https://www.gtlaw.com.au/ | Reuters –
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