As stablecoin become widely used as a means of payment, Australia is preparing to regulate them accordingly.
Payment stablecoin could be incorporated into the framework for regulating stored-value facilities, according to Australian financial regulators who are “working on options”.
Such inclusion would be a component of more extensive changes to the nation’s regulatory structure for payments. The Reserve Bank of Australia published a paper on stablecoins on December 8 that examined their most recent advancements, hazards, and regulatory possibilities.
The report is quite upbeat in acknowledging that “stablecoins have the potential to enhance the efficiency and functionality of a range of payment and other financial services.”
The Australian regulators “are undertaking significant work” to determine how to incorporate stablecoins into the national payment network without subjecting it to undue risks, the paper claims.
Authors list these risks as include those relating to energy and the environment, disruptions in the funding markets, growing bank exposure, and liquidity issues.
The authors used the collapse of Terra to illustrate the specific fragility of algorithmic stablecoins, whose stability hinges on investors’ belief in the worth of an unbacked crypto-asset.
The CFR’s priority in the near term, according to the report, is to create a framework for payment stablecoins, “given the potential for these arrangements to become widely used as a means of payment and a store of value.”
Local senator Andrew Bragg published a draft law in September under the heading Digital Assets (Market Regulation) Bill. The proposal proposes for the issuance of licenses to stablecoin issuers, digital asset exchanges, and digital asset custody services.
The Reserve Bank of Australia’s Assistant Governor, Brad Jones, recently announced that the financial sector had submitted more than 140 use case proposals for the central bank digital currency (CBDC) pilot program in Australia. The central banker cautions that such enthusiasm in CBDC could undermine the Australian dollar and cause individuals to completely shun commercial banks.
