As stablecoins are used as a means of payment, Australia is preparing to regulate them properly.
Australian regulators are working on options to bring paid coins into the regulatory framework for secure assets. Such an addition would be part of broader changes in the payment system in the country. On December 8, the official website of the Reserve Bank of Australia released a report on stablecoins, examining their recent development, risks, and regulations. Despite the great focus on risk, in particular, the report is very optimistic and admits that “stablecoins can improve the efficiency and effectiveness of many debts and other financial services.”
According to the report, Australian regulators are working “in a significant way” to figure out how to implement stablecoins into the country’s deposit system without exposing it to risk. Among these risks, the authors cite climate-related forces and impacts, disruptions in financial markets, and exposure to banking and financial risks.
The authors highlight the particular fragility of algorithmic stablecoins, whose stability depends on investors’ confidence in the value of an unbacked crypto asset, citing the example of the failure of Terra. The report reiterated that creating a system for paying stablecoins is imminent for the CFR, “because these systems can be used in many places as a means of payment in the store of value.”
In September, local MP Andrew Bragg introduced a bill called the Digital Assets (Market Regulation) Bill. The document calls for the introduction of licenses for digital asset exchanges, digital asset storage services, and stablecoin providers. Brad Jones, Deputy Governor of the Reserve Bank of Australia, recently announced that the pilot program of his central bank (CBDC) in Australia has received more than 140 use cases from financial institutions. However, the central banker warns that such interest in CBDCs could drive down the Australian dollar and cause people to avoid commercial banks altogether.
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