“It represents the most significant reforms to our payments system in 25 years,” said Treasurer Josh Frydenberg.
Australia is now planning for a central bank digital currency (CBDC).
The government will consult on a digital version of the fiat currency, Treasurer Josh Frydenberg said in a speech in Melbourne.
Besides the CBDC, the government is already working on crypto regulation. On Wednesday, Frydenberg also said that they would consider a licensing framework to allow crypto transactions within a regulated environment and the best way to introduce a new and appropriate crypto taxation policy.
“The comprehensive payments and crypto-asset reform plan I am announcing will firmly place Australia among a handful of leading countries in the world,” Frydenberg said in an interview with 7NEWS Australia. “It represents the most significant reforms to our payments system in 25 years.”
For this modernization, the new regulations will “broaden” the definition of products and services that can be regulated, which will take crypto “out of the shadows” and into their “world-leading” regulatory framework.
Advice on both is expected to be received by the end of next year.
Regulatory Clarity, Enormous Opportunity
Australia needs to leverage the new technology to gain an advantage, said Frydenberg, noting that the crypto-asset market has surpassed $2 trillion. He further said that more than 800,000 Australians, about 3% of the population, own crypto in some form.
“These are significant shifts which we need to be in front of,” he said. “What is clear is that if we embrace these developments, Australia has an enormous opportunity to capitalize on the convergence between finance and technology.”
The government will also be looking to introduce more regulations over fees being charged to users of digital wallets and ‘Buy Now Pay Later; which accounts for 20% of online retail transactions, with more than 5 million active accounts, in Australia.
While about half of Australia’s population now make payments on their phones, services like Google Pay, Apple Pay, and AfterPay don’t fall under the Payment System Regulation Act, making it difficult for the authorities to oversee the fees charged by them or to promote competition.
As such, they will begin the consultation on modernizing the payment system framework next year.
For consumers, this will establish a regulatory framework to underpin their growing use of crypto and clarify the treatment of new payment methods, and for businesses, these changes will address the tax treatment of crypto assets, new payment methods, and of course, the regulatory ambiguity.
“In doing so, it will drive even more consumer interest, facilitate even more new entrants and enable even more innovation to take place,” said Frydenberg.
BOT Worried About Blank Coins
This week, Thailand’s central bank meanwhile warned commercial banks from being directly involved in trading digital assets, citing the risks arising from high price volatility.
“We don’t want banks to be directly involved in digital asset trading because banks are (responsible) for customer deposits and the public, and there is risk,” said Chayawadee Chai-Anant, a senior Bank of Thailand (BOT) director at a news conference.
Last week, the central bank also warned companies from accepting crypto as payment as it will impact their ability to oversee the economy.
“For digital assets, we are not afraid of everything,” said BOT senior director Sakkapop Panyanukul, “but there is a spectrum – most worrying are blank coins,” those cryptos not benign backed by assets.