Federal Treasurer Josh Frydenberg has announced a payments and cryptocurrency asset “reform plan” he says will put Australia at the front of the pack.
“It represents the most significant reforms to our payments system in 25 years,” he told the Australian-Israel Chamber of Commerce on Wednesday.
The technology sector is already estimated to be generating $167 billion in output and employing more than 850,000 Australians.
With more than 220 million participants, global cryptocurrency assets are worth more than $US2 trillion ($A2.8 trillion).
“Australia has an opportunity to be among the leading countries in the world in leveraging this new technology,” Mr Frydenberg said, joining fellow Liberal Jane Hume, who says crypto is “not a fad”.
Early next year, Mr Frydenberg plans to begin talks on a licensing framework for digital currency exchanges that will regulate the purchase and sale of cryptocurrency assets, and on a custody regulatory regime for businesses that hold crypto assets on behalf of consumers.
Westpac chief executive Peter King agreed Australia needed a system “fit for the times”.
“Modernising our payments infrastructure and its regulation, including cryptocurrency regulation, will strengthen our financial system and improve protections for customers,” he said.
“Today’s announcement is good news.”
Mr Frydenberg said work on a retail central bank digital currency (CBDC) will start with advice on pilot due before the end of 2022.
The Board of Taxation will advise on a policy framework for taxing digital transactions and assets and report back by the end of 2022.
“De-banking” is another problem for individuals and businesses that the treasurer wants to tackle. It occurs when a bank declines to provide a banking service.
Almost half of Australians make payments using their mobile phone and COVID-19 has accelerated the use of digital wallets.
About 55 million non-cash payments worth about $650 billion are made in Australia every day, from shopping online to digital pay packets landing in a bank account or a tap and go payment for a coffee.
Regulators will look at fees, transparency and competition in the market.
Mr Frydenberg said centralising oversight of the payment system would give the government a greater leadership role, including powers for him to intervene.
Shadow treasurer Jim Chalmers said no action would be taken on payments or cryptocurrencies before the next federal election, which must be held by May.
“This is just a commitment to consult on the government’s last consultation,” he said.