Stablecoin framework is a near-term priority for Aussie regulators

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 Aus­tralian finan­cial reg­u­la­tors are “work­ing on options” for incor­po­rat­ing pay­ment sta­ble­coins into the reg­u­la­to­ry frame­work for stored-val­ue facil­i­ties. Such incor­po­ra­tion would be a part of broad­er reforms to the pay­ments reg­u­la­to­ry frame­work in the country. 

On Dec.8 the offi­cial site of the Reserve Bank of Aus­tralia pub­lished a report on sta­ble­coins, assess­ing their recent devel­op­ments, risks and reg­u­la­to­ry prospects. Despite the high atten­tion giv­en to risks, in par­tic­u­lar, the report is quite opti­mistic in acknowl­edg­ing that “sta­ble­coins have the poten­tial to enhance the effi­cien­cy and func­tion­al­i­ty of a range of pay­ment and oth­er finan­cial services.”

Accord­ing to the report, the Aus­tralian reg­u­la­tors “are under­tak­ing sig­nif­i­cant work” to fig­ure out how to imple­ment sta­ble­coins into the nation­al pay­ment ecosys­tem with­out expos­ing it to exces­sive risks. Among such risks, authors cite ener­gy and cli­mate-relat­ed impacts, dis­rup­tions to fund­ing mar­kets, increas­ing bank expo­sure and liq­uid­i­ty risks. 

The authors high­light­ed the par­tic­u­lar fragili­ty of algo­rith­mic sta­ble­coins, whose sta­bil­i­ty depends on investors’ con­fi­dence in the val­ue of an unbacked cryp­to-asset, and cit­ed the exam­ple of Ter­ra collapse. 

Relat­ed: Dig­i­tal assets could add $40B a year to Aussie GDP: Tech Coun­cil report

The report reit­er­ates that devel­op­ing a frame­work for pay­ment sta­ble­coins is a pri­or­i­ty in the near term for the CFR, “giv­en the poten­tial for these arrange­ments to become wide­ly used as a means of pay­ment and a store of value.” 

In Sep­tem­ber, local Sen­a­tor Andrew Bragg released a draft bill, titled Dig­i­tal Assets (Mar­ket Reg­u­la­tion) Bill. The doc­u­ment calls for the intro­duc­tion of licens­es for dig­i­tal asset exchanges, dig­i­tal asset cus­tody ser­vices and sta­ble­coin issuers.

Brad Jones, Assis­tant Gov­er­nor at the Reserve Bank of Aus­tralia, recent­ly shared that its cen­tral bank dig­i­tal cur­ren­cy (CBDC) pilot pro­gram in Aus­tralia has received more than 140 use case pro­pos­als from the finance indus­try. How­ev­er, the cen­tral banker warns that such inter­est in CBDC could dis­place the Aus­tralian dol­lar and result in peo­ple avoid­ing com­mer­cial banks entirely.

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