Reserve Bank of Australia Seeks Urgent Powers to Overlook Growing Crypto Sector

Updated by Nicole Buckler
In Brief
  • RBA governor and ASIC chairman have asked the government for more powers to regulate crypto.
  • The officials have asked for urgent implementation of last year's Treasury and Senate reports.
  • The recommendations can change the payment licensing system while granting more powers to the regulators.
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As consumers turn to the crypto economy, RBA governor Philip Lowe and ASIC chairman Joe Longo have asked for more powers to regulate the sector this year.

Local media reports stated that the Reserve Bank of Australia’s governor has asked the government to take the plea into urgent consideration. Which will give sufficient powers to the watchdogs to overlook the virtual asset space.

As part of this, Lowe has asked for the adoption of a national plan to monitor the country’s payment system. This recommendation was essentially made in last year’s Treasury review.

Dr. Lowe commented in an event, “The nature of money changes with technology and technology is quickly changing.”

In the review dated December 2021, Treasurer Josh Frydenberg had stated that by mid-2022, the Government will complete a licensing framework for crypto platforms. Additionally, a new framework would “replace the current one-size-fits-all payment licensing arrangements with a functionally based framework adopting graduated, risk-based regulatory requirements.”

It is no news that new fintech entrants have turned into crypto service providers amid peaking consumer interest. And, in the new era of banking, regulators globally are asking for a changed approach to keep up with the technology.

Dr. Lowe also stated, “We need that plan, and it needs to be good. It needs wide buy-in. There are also important pieces of legislation that will need to be passed to make sure that Australia is well-placed for the innovations of the future.”

Further, the regulators also asked that the government respond to the Council of Financial Regulators’ “stablecoins” plans. In an earlier speech, Governor Lowe had warned investors of the risks of investing in crypto, including stablecoins.

He had noted that if privately issued stablecoins are ultimately the way things head, it will be crucial that they meet very high standards, adding that, “Council of Financial Regulators is continuing to review the regulatory treatment of different types of crypto-assets.”

Industry needs reforms as market adoption grows

Meanwhile, Shadow Treasurer Jim Chalmers opined in the paper that the existing system, “lacks coherent oversight to address the complexity of issues and the pace of frequent innovation in the sector,” reflecting on the need for payment reforms by the Labor government.

Reforms that Chalmers believe will be “empowering regulators and facilitating regulation that is as agile as the sector itself.”

With that, we must recall the October 2021 Senate report that proposed a crypto framework model. Apart from a governance regime, the bipartisan proposal granted powers to the Treasury to control cryptocurrency exchanges as financial markets license-holders.

Implementation of these recommendations by lawyer Scott Farrell and the Senate committee chaired by Andrew Bragg are called “urgent” by Longo. The ASIC chief noted, “In the short time I have been chair, I have been surprised how quickly this phenomenon has grown and has assumed a lot more of my time than I suspected before I started.”

These guidelines are not only aimed to regulate pure-play crypto platforms, but can also reportedly oversee tech giants like Facebook and Apple.

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