- The proposal was in response to the rise in popularity of digital payment networks, including Google Pay and Apple Pay
- These changes could potentially bring digital payment networks closer to the purview of financial regulations and authorities.
The Australian government seeks to regulate non-bank digital payment wallets and transactions in the country to modern standards.
This development was in response to the remarkable rise in popularity of digital payment networks, including Google Pay, Apple Pay, and WeChat Pay. Notably, these proposed regulations could have a profound impact on the cryptocurrency landscape in Australia.
Digital payment platforms have experienced exponential growth, witnessing a surge in transaction volumes from 29.2 million in 2018 to a staggering 2.4 billion in 2022.
As the country grapples with this evolving financial landscape, the government is looking to modernize the Payment Systems (Regulation) Act (PSRA) of 1988. The proposed changes look to expand the definitions of essential terms like “payment system” and “participant.”
Traditional financial systems to gain more push
Under the current regulatory framework, Australia’s Reserve Bank is the sole authority. However, the proposed modifications introduce civil penalty provisions, “enforceable undertakings,” and an increase in maximum criminal penalties where applicable. What makes this development particularly noteworthy is its potential implications for the cryptocurrency sector.
Although digital wallets such as Google Pay and Apple Pay generally require connections to regulated bank accounts and credit cards, transactions involving digital wallets currently exist outside the realm of Australia’s financial regulations and banking systems.
These changes could potentially bring digital payment networks closer to the purview of financial regulations and authorities.
A game changer for the Australian crypto market?
The revised regulatory framework does not explicitly mention digital currencies or blockchain technology. However, the broader definitions of terms like “funds” and “payment system” could potentially encompass digital assets like cryptocurrencies if the government deems it necessary.
In many countries, including Australia, cryptocurrencies are primarily used for speculative trading, with limited adoption for consumer purchases. These regulations may signal a shift in how cryptocurrencies are treated within the regulatory landscape.
The motivations behind the government’s decision to enact these regulatory changes have sparked several theories.
One suggests that governments naturally seek increased surveillance and control, extending these powers to encompass payments outside the traditional banking system. This could have significant implications for the cryptocurrency sector, as it operates outside the traditional financial framework.
Another perspective points to the banking sector’s desire for greater transparency regarding technology giants’ fee structures and transaction statistics. As digital payments become more prevalent, large banks are looking to maintain their competitive edge.
However, it is to be noted that Australia’s approach to cryptocurrency and blockchain has historically been favorable, with cryptocurrencies like Bitcoin recognized as legal and treated as property. Cryptocurrencies can be traded, spent, received, and stored in the country. It is also accepted as a means of payment for personal and business transactions. However, merchants are not obligated to accept them.
Additionally, the government is taking steps to develop a regulatory framework for the cryptocurrency sector. The main focus is on consumer protection and market integrity.
