The Australian Council of Financial Regulators (CFR) released their quarterly statement this week breaking their silence on the issue of cryptocurrency regulation.
The report outlines the potential policy implications of what they term "so-called" stablecoins and associated payment services.
The CFR is the coordinating body for Australia’s main financial regulatory agencies, consisting of four members – the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC), the Reserve Bank of Australia (RBA) and The Treasury. The Reserve Bank Governor chairs the CFR and the RBA provides secretariat support.
The CFR quarterly release makes clear that stablecoins would not escape elements of the existing regulatory framework, along with the framework proposed for stored-value facilities, stating that:
"Australian regulators would need to consider any international regulatory frameworks that might ultimately be established."
The CFR also made in the report that Australia's response should focus on implementing a technology-neutral regulatory regime in dealing with these innovations. While it is important that regulations not seek to "pick the winners" this statement reminds me of the saying:
The Law, in it's wisdom, forbids both the rich and poor from stealing bread and living under a bridge.
All regulation has a real world impact, and will impact different technologies in different ways, practically resulting in some technology having an advantage over others.
Given that Australia is working towards a Blockchain Roadmap for Government, the writer believes that a focus on the benefits of this particular technology, and regulation specifically addressing the aspects of blockchain which need guidance, is critical given the amount of disruption blockchain will create.
The announcement of Libra and following regulatory engagement have plainly put cryptocurrencies and stablecoins on the regulation agenda in a more urgent way.
Collaboration between Australian regulators in analyzing the nature of stablecoins, and drawing on the approaches of other international jurisdictions focused on similar issues will be essential to ensure the potential benefits of these new forms of payments are brought to Australian's and we maintain our leadership in the blockchain world.
Already we have seen projects leaving Australia in droves due to regulatory uncertainty, and it will be a great day when that "brain drain" is stopped or reversed.