Aussie reforms on the way for cryptocurrency, digital wallets and BNPL providers | ZDNet

Australian Treasurer Josh Frydenburg has announced a series of regulatory proposals covering cryptocurrencies, digital wallets and buy now pay later (BNPL).

The announcements follow the launch of Three government critics All of that found that Australia's regulatory environment has failed to keep up with the changing payments landscape, where half of Australia's population now makes around AU $ 650 billion in non-cash payments every day.

Given the changing landscape, Frydenburg said the federal government would respond to all 41 recommendations in all three reviews.

The reforms will seek to give the Treasury broader powers to oversee payments policy and address emerging and future gaps in the payments regulatory framework.

"Given the pace of change and those leading it, if we don't reform the current framework, it will be Silicon Valley that will determine the future of our payments system," said Frydenburg.

"Australia must retain its sovereignty over our payment system."

As part of those powers, the Treasury will work with industry and regulators to develop a strategic plan for payments systems to be launched in the middle of next year. The plan will involve the implementation of regulatory oversight on digital wallets, such as Apple Pay and Google Pay, as well as BNPL providers such as Afterpay.

Currently, Australia's payment system laws do not regulate BNPL's digital wallets or providers.

The requirement that digital wallet providers hold Australian financial services licenses could be on the table, although the federal government has noted that this would only be considered on a case-by-case basis.

As for potential cryptocurrency reforms announced Wednesday, the federal government will consider requiring digital currency exchanges (DCEs) to keep Australian investors' assets grounded. Consultation will also begin early next year on a licensing framework for DCE that will allow for the purchase and sale of crypto assets by consumers within a regulated environment.

Meanwhile, the Australian Tax Board will begin research to advise on a policy framework for the taxation of digital assets and transactions.

"For businesses, these reforms will address the ambiguity that may exist about the regulatory and tax treatment of crypto assets and new payment methods. By doing so, it will further drive consumer interest, facilitate even more new entrants, and enable even more innovation. . "said the treasurer of Australia.

These cryptocurrency reforms and initiatives are expected to roll out throughout 2022.

The Treasury will also initiate consultations on the viability of a retail central bank digital currency (CBDC), a digital asset issued by a central bank and pegged to a sovereign currency. Its CBDC findings will be provided by the end of next year.

The Reserve Bank of Australia said so last month remained unconvinced by the cryptocurrency boom, arguing that the emergence of a centrally issued digital asset, such as a CBDC, could make cryptocurrencies redundant.

The Australian Securities and Investments Commission similarly took a conservative stance last month, with agency chairman Joe Longo saying that consumers should approach investing in crypto assets with "great caution."

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

Finally, on the issue of unbanking, the federal government will entrust the Council of Financial Regulators to consider policy options to address the large number of fintech and DCE facing this experience.

The chief executive of Fintech Australia in September told a Senate committee that around 150 of your organization's members have been unbanked by banks and financial institutions in Australia, without providing reasons or ability to appeal the decision. Unbanking occurs when a bank refuses to provide its services to a person or company. Austrac has indicated that unbanking could increase the risk of money laundering and terrorist financing while damaging the economy.

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