The bill will also seek to address the rise of central bank-issued digital currencies (CBDCs), including the Chinese e-yuan, which is the first CBDC to be issued by a major economy. Under the proposed laws, China’s state-owned banks would be required to report on the use of electronic yuan to the Reserve Bank and banking regulator APRA.
E-Yuan is not yet available in Australia, but Bragg said the bill will ensure Australia is ready for now.
“We want to make sure that all reporting mechanisms are in place. If the digital yuan were to become a popular option among unbanked people in the Pacific Rim, wouldn’t we want to seriously think about how we’re going to respond to that? ” he said.
Australia is well behind many of its international peers when it comes to cryptocurrency regulation, with the United States releasing a framework this week on what regulation should look like in the country and some states, such as the Wyoming, introducing pro-crypto regulation.
Industry players in Australia are very supportive of additional regulation, although some have expressed concerns that the rapidly changing nature of the industry could mean that any regulations introduced fail to keep up with new developments.
For example, last week the second largest crypto, Ethereum, completed its long-awaited “merger”, converting the network from its power-hungry “proof-of-work” consensus algorithm to a more efficient “proof-of-stake” system.
However, due to the nature of the change, which will allow Ethereum holders to lock – or “bet” – their crypto to earn rewards, the chairman of the North American financial regulator said the asset can now be considered a security and could be subject to new laws.
Bragg said issues like this would always be a risk when trying to regulate emerging markets, but believes the bill has the right frameworks to cover most scenarios. “The bill has been drafted to define certain ‘must-haves’, but the rest is left to regulation and it allows the minister of the day to make decisions,” he says. “There’s no way to lock everything into a bill, because that would date the bill from when it’s passed.”