It wasn't too long ago that most governments were dismissive of cryptos.
Perhaps officials believed if they ignored the newly arrived digital currencies, they'd simply fade away.
Of course, we know how that's worked out.
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Combined crypto assets worth $3.5 trillion
The combined crypto market cap now stands somewhere north of US$2.5 trillion (AU$3.5 trillion.) And in Australia approximately 17% of the residents currently hold crypto.
With those figures in mind, the Aussie government is stepping up its efforts and pace to both regulate Bitcoin (CRYPTO: BTC) and its fellow altcoins, as well as formulating plans to launch its own digital currency.
As 9 News reported, "Treasurer Josh Frydenberg confirmed the Commonwealth and Reserve Bank were now working on the feasibility of a central cryptocurrency in Australia."
On 3 November, Commonwealth Bank of Australia (ASX: CBA) became the first Aussie bank to offer crypto services to its customers.
According to notes from the treasurer's speech, delivered today and published by The Australian this morning, Frydenberg says that despite the disruption digital assets have created:
The regulatory framework governing the payments system has remained largely unchanged over the last 25 years. Given the pace of change and those leading it, if we do not reform the current framework it will be Silicon Valley that determines the future of our payments system. Australia must retain its sovereignty over our payment system.
The Treasury and Reserve Bank of Australia (RBA) are looking into the possibility of launching an Aussie Central Bank Digital Currency (CBDC).
CDBCs are issued by central banks and the value is linked to the issuing nation's fiat currency. In our case, that's the Aussie dollar. One spruiked benefit is that it would simplify foreign exchange issues and international money transfers.
RBA governor Philip Lowe is scheduled to speak at the Australian Payments Network summit tomorrow to shed more light on the government's plans for an Australian issued CDBC.
Industry consultation 'critical'
Jonathon Miller, managing director of crypto exchange Kraken Australia, welcomed the news of potential Australian issued CDBCs. But he noted that CDBCs and cryptos like Bitcoin are still "very different".
According to Miller:
We are fully supportive of any developments, like CBDCs, that seek to remove intermediaries. This reduces costs, improves efficiency and most importantly places financial decision making in the hands of private individuals. Whilst allowing a direct relationship between a Central Bank and private individuals and enterprises would give rise to many efficiency gains, it's still very different from the promise that cryptocurrencies are delivering.
Miller also advised that regulators move with care in the nascent crypto world:
We urge caution when developing licensing and custody frameworks for digital currency exchanges and custodians…
It's critical that the government consults with the industry so that best practice can be developed by looking at existing secure and trustworthy exchanges. The novel character of digital assets means there is no existing licensing regime that is appropriate.
