Aussie Regulatory Reforms Could Affect Cryptocurrency & Online Banking

The Australian government has released a slew of regulatory ideas covering digital currencies, digital wallets, and buy now, pay later (BNPL). The announcements follow the publication of three government inquiries that all concluded Australia’s regulatory environment had fallen behind the changing payments landscape, where half of Australia’s population makes around AU$650 billion non-cash transactions every day.

Given the evolving climate, Frydenberg said that in order to address all of the 41 recommendations made across three reviews, the federal government would react to them all. The changes will aim to give Treasury greater control over payments policy and gaps in the payments regulatory structure as they emerge and develop.

“Given the pace of change and those leading it, if we do not reform the current framework it will be Silicon Valley that determines the future of our payments system,” Frydenburg said.

“Australia must retain its sovereignty over our payment system.”

Under the new powers, Treasury will work with businesses and regulators to create a long-term strategy for payments systems that will be implemented in the middle of next year. The plan will include oversight of digital wallets, such as Apple Pay and Google Pay, as well as BNPL providers like Afterpay. At present, Australia’s payment systems laws do not apply to digital wallets or BNPL providers.

The federal government has stated that if digital wallet providers do not have Australian financial services licenses, they will be considered for those licenses.

The federal government will examine whether to impose on DCEs the obligation to keep Australian investors’ assets onshore as a result of yesterday’s proposed cryptocurrency changes. It’ll begin consultation next year on a licensing system for DCEs that enable consumers to buy and sell cryptocurrencies within a regulated market.

Meanwhile, the Australian Taxation Office has announced that it will begin researching a tax policy framework for digital transactions and assets.

“For businesses, these reforms will address the ambiguity that can exist about the regulatory and tax treatment of crypto assets and new payment methods. In doing so, it will drive even more consumer interest, facilitate even more new entrants, and enable even more innovation to take place,” Australia’s treasurer said.

The Consensus currencies are expected to be implemented across 2022. A retail central bank digital currency (CBDC), a digital asset issued by a central bank and linked to a sovereign currency, will begin consultation. At the end of 2019, its CBDC findings will be published.

The Reserve Bank of Australia, meanwhile, has stated that while it is unconvinced by the cryptocurrency trend, the development of a centrally issued digital asset like a CBDC might render cryptocurrencies obsolete. Last month, the Australian Securities and Investments Commission (ASIC) took a balanced approach, with agency chair Joe Longo advising investors to be cautious when dealing with crypto assets.

“Those here who are directly involved in the broader managed investments sector will understand the serious implications of investing without understanding. It is not an approach to be undertaken lightly,” Longo said.

Finally, on the topic of de-banking, the federal government has assigned the Council of Financial Regulators with researching policy options for dealing with the many fintechs and DCEs who have been de-banked.

In September, the CEO of Fintech Australia informed a Senate committee that 150 of her organization’s members had been de-banked by Australian banks and financial institutions without explanation or opportunity to appeal. When a bank refuses to provide services to a person or company, this is known as debanking. According to Austrac, debanking might increase money laundering and terrorism financing risks while injuring the economy.