Australia will create a licensing framework for cryptocurrency exchanges and consider launching a retail central bank digital currency (CBDC) as part of the biggest overhaul of its A$650 billion-a-day ($463 billion) payments industry in a quarter of a century.
The country will also broaden its payment laws to cover online transaction providers such as Apple and Google as well as buy-now-pay-later providers such as Afterpay, ending their run of operating without direct supervision.
“If we do not reform the current framework, it will be Silicon Valley that determines the future of our payment system,” Treasurer Josh Frydenberg said in speech. “Australia must retain its sovereignty over our payment system.”
Australia’s conservative Liberal-National coalition government is positioning itself at the front of global efforts to rein in large technology companies, while taking a more inclusive approach than India and China, which have criminalised cryptocurrency.
The use of cryptocurrency and non-cash payments has exploded in Australia during the pandemic as people’s lives shifted online.
“Without reform, Australian businesses and consumers could increasingly transact in environments that are largely unregulated from an Australian perspective, with any rules in play instead determined by foreign governments and large multinationals, including tech giants,” the Treasurer said.
Half Pay Using Phones
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.
Frydenberg said the government would begin consultation in early 2022 on establishing a 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, Frydenberg added.
Afterpay said it supported “any approach that takes into account consumer benefits from the innovation and competition Afterpay has brought to the market”.
Afterpay has agreed to a buyout from Square, the US payments company run by Twitter founder Jack Dorsey.
- Reuters, with George Russell