Australia will introduce the biggest reform of payments rules in two decades amid increasing use of cryptocurrency and Buy Now Pay Later.
The biggest change to Australia’s payment system in a quarter century will come under plans to tighten regulations around cryptocurrencies, services like Buy Now Pay Later and Apple Pay.
Treasurer Josh Frydenberg will announce major reforms Wednesday that will give him more powers to intervene in a still-fast-growing sector under rules designed in the 1990s.
“The comprehensive payments and crypto asset reform plan I am announcing will put Australia firmly among some of the world’s leading countries,” said Mr. Frydenberg.
“This represents one of the most significant improvements to our payment system in 25 years.”
Cryptocurrency is one of the most urgent areas for scrutiny, with the government looking to introduce greater protections for consumers and clearer obligations for businesses.
Currently the offering, buying and selling of crypto assets in Australia is mostly unregulated.
It’s not treated as a financial product under the Corporations Act – meaning there’s not much a person can do about it if things go wrong.
Consultations on a new licensing framework will begin next year and will also seek advice on the best way to introduce a new and appropriate crypto taxation policy.
The government will also consider introducing more rules on Buy Now Pay Later and fees charged to users of digital wallets.
Buy Now Pay Later accounts for about 20 percent of online retail transactions in Australia, with more than 5 million active accounts.
Nearly half of Australia’s population now pays on their mobile phones – a trend that spread during the pandemic.
But currently services like Apple Pay, Google Pay and AfterPay are not covered under the Payment Systems Regulation Act.
This makes it difficult for the Government and the Reserve Bank of Australia to keep any watch on fees charged to use the system, or to promote competition in the market.
Discussions on how to modernize this payment system framework will begin next year as part of the plan.
“For consumers, these changes will establish a regulatory framework to reduce their increased use of crypto assets and clarify the treatment of new payment methods,” said Mr. Frydenberg.
“For businesses, these improvements will address the ambiguity that may exist regarding regulatory and tax treatment of crypto assets and new payment methods.
“By doing so, it will spur even more consumer interest, facilitate even more new entrants and be able to innovate even more.”
Mr Frydenberg said Australia needs to take advantage of the new technology – noting that global crypto assets are now worth US$2 trillion.
“These are important changes that we need to get ahead of.
“It is clear that if we accept these developments, Australia has a great opportunity to capitalize on the convergence between finance and technology.”