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Australian Treasurer Josh Frydenberg reveals changes for Bitcoin, cryptocurrency, buy now, pay later

Australians who buy cryptocurrencies and use buy now, pay later services such as Afterpay will have stronger consumer protections from next year under world-first changes to alternative finance.

A general distrust of banks has seen more than 800,000 Australian investors put their money into crypto, including Bitcoin, over the past three years and platforms such as Afterpay and Zip Money are increasingly popular. 

Treasurer Josh Frydenberg on Wednesday unveiled the most comprehensive changes to Australia’s payments system since the mid-1990s, with new rules to cover the modern day services.  

 

Australians who buy cryptocurrencies will have consumer protections from next year under world-first changes to alternative finance. A distrust of the banks has seen Australians embrace digital currencies, including the popular Bitcoin, but the system is unregulated leaving many investors with no protection if they are ripped off

‘We’re modernising the payments system, we’re broadening the definition of the services and the products that can be regulated,’ he told Seven’s Sunrise program. 

‘We’re taking this area out of the shadows and into a considered regulatory framework.’

  • Cryptocurrency trading platforms will be licensed by the government
  • A central bank digital currency will also be created 
  • Buy now, pay later apps will have their fees regulated for the first time 

Treasury in early 2022 will begin putting together a licensing system for digital currency exchanges. 

Canberra bureaucrats will also be exploring the idea of a central bank digital currency, with recommendations by the end of next year.

‘For consumers, these changes will establish a regulatory framework to underpin their growing use of crypto assets and new payment methods,’ Mr Frydenberg said.

‘As more Australians utilise these technologies and invest in these digital assets, it is important that a robust regulatory regime underpins their interactions.’ 

Afterpay doesn't charge interest and allows consumers to pay off goods in four equal installments but they incur hefty penalties for late payments, ranging from $10 per $40 order to $68 for orders worth more than $40. Treasury has flagged new rules covering fees and allowing other players into the market (pictured is Afterpay co-founder Nick Molnar with his wife Gabrielle)

Afterpay doesn’t charge interest and allows consumers to pay off goods in four equal installments but they incur hefty penalties for late payments, ranging from $10 per $40 order to $68 for orders worth more than $40. Treasury has flagged new rules covering fees and allowing other players into the market (pictured is Afterpay co-founder Nick Molnar with his wife Gabrielle)

Afterpay doesn’t charge interest and allows consumers to pay off goods in four equal instalments but they incur hefty penalties for late payments, ranging from $10 per $40 order to $68 for orders worth more than $40. 

Treasury has flagged new rules covering fees and allowing other players into the market.

‘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,’ a summary said.

The new regulations were flagged just five weeks after a Senate committee on financial technology recommended a licensing system for digital currency exchanges and a central bank digital currency.

Reserve Bank of Australia data showed there were more than five million active buy now, pay later accounts as of June 30 this year, accounting for one in five retail transactions.

Even before the pandemic in 2019, cash made up just 27 per cent of transactions, a substantial drop from 69 per cent in 2007. 

Australian Taxation Office figures showed 819,000 Australians have bought a cryptocurrency since 2018 with the number of transactions in 2021 increasing by 63 per cent compared with 2020.

Treasurer Josh Frydenberg is on Wednesday unveiling the most comprehensive changes to Australia's payments system since the mid-1990s, with new rules to cover cryptocurrency and buy now, pay later apps like Afterpay

Treasurer Josh Frydenberg is on Wednesday unveiling the most comprehensive changes to Australia’s payments system since the mid-1990s, with new rules to cover cryptocurrency and buy now, pay later apps like Afterpay

Non-cash payments in Australia are now worth $650billion a day, with 55 million transactions made from tap and go to online purchases and transfers.

Cryptocurrency changes in 2022

LICENSING: New regulations would cover digital currency trading platforms

CENTRAL BANK DIGITAL CURRENCY:  Government exploring the idea of a retail central bank digital currency in Australia

REGULATION: Treasury argued Australian regulation was needed so Australian businesses and consumers weren’t governed by foreign government and big corporation rules

The Council of Financial Regulators – comprising Treasury, the Reserve Bank of Australia, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission – will be providing recommendations by mid-2022.

Bitcoin has surged in value in 2021, climbing from less than $25,000 a year ago to $71,200 now. 

But a month ago, it was worth more than $91,000.

In May, Bitcoin lost a third of its value within a week, plunging from $74,000 to $50,000, after billionaire Tesla founder Elon Musk changed his mind on accepting Bitcoin as payment for his electric cars.

The 50-year-old tycoon argued cryptocurrency mining, creating Bitcoin by solving complex mathematical puzzles, used too many fossil fuels and his declaration causing a 16 per cent plunge in just one day.

Until cryptocurrency is regulated, the only regulated products linked to cryptocurrency would be exchange traded funds on the Australian Securities Exchange.

BetaShares this month launched CRYP on the ASX which invests in companies that are involved in the broader crypto investments.

Bitcoin has surged in value in 2021, climbing from less than $25,000 a year ago to $71,200 now. But a month ago, it was worth more than $91,000. In May, Bitcoin lost a third of its value within a week, plunging from $74,000 to $50,000, after billionaire Tesla founder Elon Musk changed his mind on accepting Bitcoin as payment for his electric cars

Bitcoin has surged in value in 2021, climbing from less than $25,000 a year ago to $71,200 now. But a month ago, it was worth more than $91,000. In May, Bitcoin lost a third of its value within a week, plunging from $74,000 to $50,000, after billionaire Tesla founder Elon Musk changed his mind on accepting Bitcoin as payment for his electric cars

In November Tony Richards, the head of the Reserve Bank of Australia’s payments policy section, said a big plunge in cryptocurrencies was likely.

‘There are plausible scenarios where a range of factors could come together to significantly challenge the current fervour for cryptocurrencies, so that the current speculative demand could begin to reverse, and much of the price increases of recent years could be unwound,’ he told Australian Corporate Treasury Association.

The Commonwealth Bank in November announced it would allow cryptocurrency to be traded on its banking app, making it the first bank in Australia to allow this.

The 6.5million customers of Australia’s biggest bank will be able to buy and sell digital currencies like Bitcoin in the way they can make share transactions on a CommSec app.

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Read more at DailyMail.co.uk