Treasurer Josh Frydenberg announces Australia’s cryptocurrency plan, tougher regulation on buy-now pay-later

Australia may get its own national cryptocurrency — potentially by the end of the decade — and buy-now pay-later services such as Afterpay could face tougher regulation under reforms being considered by Treasury and the Reserve Bank. Treasurer Josh Frydenberg will on Wednesday address the Australian Chamber of Commerce and Industry in Melbourne and will unveil the Morrison Government’s plan to deal with emerging digital markets and payments reform. The reforms, if passed by Parliament, will see a review into a national Australian cryptocurrency completed by the end of next year and potentially Australia follow China’s lead in developing its own digital currency. They could also see buy-now, pay-later services have to charge consumers fewer fees and have more transparency. Mr Frydenberg will say the “comprehensive payments and crypto asset reform plan” will allow Australia to lead the world. “For businesses, these reforms will address the ambiguity that can exist about the regulatory and tax treatment of crypto assets and new payment methods. In doing so, it will drive even more consumer interest, facilitate even more new entrants and enable even more innovation to take place,” Mr Frydenberg will say. “For consumers, these changes will establish a regulatory framework to underpin their growing use of crypto assets and clarify the treatment of new payment methods.” The regulatory system governing payments has been unchanged for 25 years despite the growing use of technology-assisted payments and, more recently, cryptocurrency. Around 17 per cent of Australians own cryptocurrency and almost half of Australians are now making payments using their mobile phone, with technology only made available in Australia in the past five or so years. When it comes to new services like buy-now, pay-later and digital wallets, the reforms will see consumers and businesses alike benefit from more appropriate regulatory oversight on fees, transparency and competition in the market. The West Australian recently interviewed former US Treasury Secretary Larry Summers who said cryptocurrency was like “digital gold”. The Government will work with industry and regulators to develop a strategic plan for the payments system by mid-2022 as part of the reforms. This will include the appropriate treatment of buy-now, pay-later services in a way that best promotes competition and innovation. Currently they don’t fall under the Payment System Regulation Act and the reforms will look at bringing them into line under that regulation. The Government will also legislate additional powers for the Treasurer to direct payment system policy and address emerging and future gaps in the payments regulatory framework. “What is clear is that if we embrace these developments, Australia has an enormous opportunity to capitalise on the convergence between finance and technology,” Mr Frydenberg will say. “Australia has an opportunity to be among the leading countries in the world in leveraging this new technology.” The reform package comes ahead of a Federal election year and also follows three reviews into Australia’s payments system. These include the Farrell payments system review, the Senate select committee on Australia as a technology and financial centre final report and the Parliamentary joint committee on corporations and financial services report into mobile payment and digital wallet financial services. An Afterpay spokesperson said the organisation welcomed “recognition from the Government that a more holistic approach needs to be taken in relation to payments policy”. “We support any approach that takes into account consumer benefits from the innovation and competition Afterpay has brought to the market, including enabling a free instalment service to consumers who pay on time.,” the spokesperson said. “We look forward to the Treasury and the Government taking a greater role in payments policy and to participating in the consultation process.”