Josh Frydenberg, Australia’s Federal Treasurer, plans to regulate crypto and payments services in the country. According to the minister, payments and crypto in the country need to be reformed. Under the proposed licensing scheme, the crypto industry would emerge from the shadows. According to the speech, the licensing regime would ensure an end to the de-banking trend facing most crypto startups in Australia.
Reform Is Necessary
The Federal Treasurer echoed sentiments by the Finance Minister, who said crypto was not a fad. According to Frydenberg, crypto was fast becoming the norm in Australia, alongside digital wallets, and Buy Now Pay Later. He pointed out that the global crypto industry was worth more than $2 trillion with over 220 million participants globally. According to Frydenberg, there were over 800,000 Australians who had transacted in crypto in the past three years, with a 63% growth in 2021 compared to 2020.
The minister believes that Australia could potentially become one of the leading nations in the world in leveraging the technology. He pointed out that nearly 17 percent of Australians own crypto, with that figure likely higher amongst younger people.
In early 2022, the Federal Treasure will begin talks on creating a licensing regime for digital currency exchanges. This framework will regulate how purchases and sales of crypto are made. Additionally, the government will work on a custody regime for businesses that hold crypto on behalf of customers.
Some in the crypto sector have welcomed the plans by the Federal Treasurer. According to an interview by a local media outlet, one CEO in the crypto sector said that it was a welcome move. The CEO of BTC Markets said that it would be a huge shame for the country not to have regulations to keep pace with international peers such as the UK, Canada, and Singapore.
Plans For A CBDC – Central Bank Digital Currency
While the minister did not outright state that Australia was working on a central bank digital currency, he said that the country should not allow itself “to be disenfranchised in this new digital payments era.” However, some have expressed reservations regarding a CBDC. They said that a CBDC should not replace physical banknotes in the country. These people note that some in Australia cannot use and access digital dollars, which would exclude them from the economy.
Australia has been working on a CBDC since 2020 when they partnered with leading Australian banks on Project Atom. Recently, they released a report on the progress of the wholesale CBDC trial. According to the report, the trial had mostly been a success. The project demonstrated the potential for a wholesale CBDC to make financial transactions faster, safer, and more efficient.
Dealing With De-Banking
De-banking is a popular trend in Australia that faces most startups in the finance world, especially crypto startups. Due to the lack of clear regulation for the sector, most startups find themselves unable to access basic financial services from local banks. Consequently, many have been forced to leave the nation. In his speech, the Federal Treasurer said that he had received advice from the Council of Financial Regulators. He said that he was working with relevant agencies to come up with policy responses to the complex issue.
Summary
Australia’s regulators seem to have embraced the crypto sector, although cautiously. There are signs that crypto regulation in the nation will be favorable to consumers. For instance, the largest bank in the country is already working on plans to offer crypto trading services to its customers.
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