Central Bank of Australia: Bitcoin does not require regulation
Compared to the measures taken by China and Vietnam, for Australia Bitcoin regulations would not be too effective because of the nature of cryptocurrency. On the contrary, it maintains that although the currency may present problems for the economic authorities, the digital exchange system does not pose pressing conflicts that require regulation.
The Central Bank of Australia addressed the growing popularity of cryptocurrencies, such as Bitcoin, in the testimony of a parliamentary committee.
The Reserve Bank of Australia (RBA) has joined a growing list of regulatory counterparts around the world in discussing its regulatory stance and views on cryptocurrencies. Earlier this month, the deputy director of the central bank of the Philippines spoke about the "benefit of using virtual currencies like Bitcoin" by calling them "fast, almost real-time and convenient".
Speaking during a testimony before the House tax and collection committee on Friday, Tony Richards, head of payments for RBA, said the central bank had observed "that members of the Committee have expressed interest in digital currencies or cryptocurrencies." . The official also revealed that the authority "has been monitoring closely" the issue of cryptocurrencies and Blockchain technology in recent years.
No bitcoin regulation
The central bank has no concerns about the regulation of cryptocurrencies as payment instruments, the official said. He claimed:
In accordance with the mandate of the bank's payment policy, digital currencies do not currently seem to pose pressing regulatory issues
The position of the Australian central bank on the regulation of cryptocurrencies as payment methods contrasts with those of their regulatory equivalents in Indonesia and Vietnam, which prohibited or want to prohibit their use as a recognized payment method.
Richards addressed the "substantial increases" in the prices of Bitcoin and Ethereum while suggesting that its driving factors were "speculative demand" and its use in Initial Currency Offers (ICO), a radical new form of fundraising driven for cryptocurrencies. "The use of Bitcoin and other digital currencies as a real payment method is still relatively limited in Australia, as elsewhere," Richards added.
While it does not reveal regulatory concerns in its use as payments, Richards told the parliamentary committee that cryptocurrencies "can serve as a means of payment in the illicit economy." He claimed:
The use may have some implications for the tax authorities and raises more important issues for the authorities responsible for the prevention and detection of crime
Notably, the central banker admitted that attempts to regulate Bitcoin as a cryptocurrency are probably useless and, instead, he asked that industry regulation facilitate it. He said:
The distributed and cross-border nature of digital currencies, such as Bitcoin, means that the regulation of the central protocols of these systems is unlikely to be effective
Richards highlighted the measures taken by the People's Bank of China, which applied a paralyzing regulation that effectively closed the exchanges of cryptocurrencies.
The official admitted that he does not understand the "longer-term prospects" of private digital currencies. However, the central banker also addressed the potential of the underlying cryptocurrency technology, Blockchain.
Richards told the parliamentary commission:
The greatest potential is likely to be in sectors where workflows involve many different parties without a reliable central entity, and where current practices are quite inefficient. Some frequently suggested cases of financial sector use include correspondent banking and remittances, as well as commercial financing
A month ago, the Australian Securities and Investments Commission (ASIC), the country's securities regulator, issued guidelines for operators and new companies that raise funds through ICOs. "In some cases, the ICO will only be subject to the general law and Australian consumer laws regarding the supply of services or products," the ASIC said, revealing that it recognized the ICO's potential to raise funds. "In other cases, the ICO may be subject to the Corporations Law."
More recently, the Australian government has revealed draft laws that encourage an "improved security environment" for ICO startups and operators to operate without a full license.