Australia Regulating Crypto Sector as part of Payments Reform

The Australian government is gearing up to regulate the activities of cryptocurrency custodians as well as exchanges in the country comprehensively. This move is part of a big overhaul, which is aimed at preserving the sovereignty of Australia over its payments system and it is likely to have an impact on providers like Google and Apple. The authorities in the country are working on updating the legislation in Australia regarding payments, which will be the largest reforms that have taken place in more than two decades. The regulatory framework will be expanded because of the changes for encompassing the new payment processors who have popped up in the online space and this includes those who deal in cryptocurrencies.

In the next year, the government is expected to begin consultations regarding establishing a licensing framework relating to crypto exchanges, along with the regulation of platforms that hold these crypto assets on behalf of their clients. It was reported that Canberra is also interested in exploring the feasibility of the Reserve Bank of Australia issuing a central bank digital currency (CBDC) in the country. There has been a massive spike in non-cash payments during the COVID-19 pandemic, including crypto transactions, with many Australians looking at online options. In fact, the daily number of these transactions has now reached 55 million.

Almost half of these people are making payments through their phones, while there has been a 63% increase in people making crypto transactions in 2021 as compared to the previous year. The plan of the authorities for broadening its payment regulations will also include online transaction processors, such as Google and Apple, along with buy-now-pay-later providers, such as Afterpay. The aim is to bring their unsupervised operations in Australia to an end. Josh Frydenberg, the Federal Treasurer, talked about the need for amendments. He said that if they didn’t reform the payment framework right now, the future of their payment system would become dependent on Silicon Valley. 

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He added that it was necessary for the country to maintain its sovereignty where its payment system is concerned. So far, Google and Apple have not made any comments regarding the matter. However, Afterpay said that it was in support of an approach that would weigh in the benefits provided to consumers through the competition and innovation they have brought. Square, a payment firm under the leadership of former Twitter CEO, Jack Dorsey has bought out Afterpay. 

This move by Australian authorities comes at a time when other major economies are also taking steps for determining their own regulatory policies about financial innovations. This obviously includes cryptocurrencies, as they have been making some big ways across the global financial landscape. It appears that similar to the United States, Australia is also looking for a more inclusive approach where these digital assets are concerned. In contrast, countries like China and even India are moving towards clamping down on activities relating to crypto. While there is no confirmation in India as yet, China has already imposed a ban on all crypto-related activities in the country. 

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