Australia is set to announce plans for far-reaching reforms of its payments system’s regulation on Wednesday (Dec. 8), including the creation of a “considered regulatory framework” for cryptocurrencies.
Calling plans for such a framework “world-leading” in a local interview, Australian Treasurer Josh Frydenberg said, “We’re taking this area out of the shadows. We want those businesses that are buying and selling cryptocurrencies to be properly licensed.”
The goal, he added, is to “provide a greater certainty and security to those people who are transacting” in cryptocurrencies.
The number of those people seemed to be less certain, as Frydenberg put the number of Australians who own or have owned cryptocurrency at 800,000. That’s far below the numbers reported by a recent online survey, which found that almost 18% of Australians own crypto — more than 4.5 million people.
The broader reform plans will see the biggest changes to the country’s payments system in 25 years, Frydenberg noted. “We’re modernizing the payment system,” he said. “We’re broadening the definition of the services and the products that can be regulated.”
The government is also planning to future-proof its regulatory framework by giving the treasurer and the Reserve Bank of Australia greater authority to direct policy over the broader payments systems industry, so it can deal more effectively with new and emerging gaps in the regulatory regime.
“There is a digital revolution occurring in our payments system,” Frydenberg said, noting that checks are on the way out and the use of cash is declining in Australia just like it is everywhere. Pointing to the growing use of digital wallets, Frydenberg noted that “digital currencies are fast becoming the new norm — and our regulatory system has not stayed up to date.”
Without these changes, he added, “Australian businesses and consumers could increasingly transact in environments that are largely unregulated from an Australian perspective.”
Not only would that put them at a competitive disadvantage, but Frydenberg also said that “any rules in play” for the country’s crypto industry would “instead be determined by foreign governments and large multinationals, including tech giants.”
However, nothing is likely to be enacted before the federal elections due by May 2022, according to the opposition’s shadow treasurer.
Frydenberg also said that the government was “going to be working with the reserve bank to look into the feasibility of introducing a central bank digital currency” — something that would be a “world-leading initiative.”
Central bank digital currencies, or CBDCs, are government-issued forms of the national fiat currency that would be legal tender, just like paper cash.
Likely blockchain-based, CBDCs are a big issue in the Asia-Pacific region, as China is on the verge of issuing a digital yuan, putting it far ahead of any large economy in the world. The extensively tested CBDC is scheduled to be put into circulation before the Beijing Winter Olympics in February.
China’s digital yuan project has lit a fire under governments around the world, with some concerns that it could be used more effectively across borders, increasing China’s economic and political clout.
One of those is the Asia-Pacific region’s other giant, India, which is getting serious about creating its own CBDC, with a pilot planned as soon as early 2022.