As part of the biggest overhaul of its A$650 billion-a-day ($463 billion) payments industry in a quarter century, Australia will create a licensing framework for cryptocurrency exchanges.
Additionally, the country will introduce payment laws that will cover online transaction providers such as Apple Inc and Alphabet Inc’s Google, as well as buy-now-pay-later (BNPL) providers such as Afterpay Ltd and end the run of them operating without direct supervision.
“If we do not reform the current framework, it will be Silicon Valley that determines the future of our payment system,” Treasurer Josh Frydenberg said in speech. “Australia must retain its sovereignty over our payment system.”
Taking a more inclusive approach than countries like India and China, Australia’s conservative government is leading global efforts to rein in large tech companies.
The use of cryptocurrency and non-cash payments has exploded in Australia during the pandemic as people’s lives shifted online.
Australians make 55 million non-cash payments every day, according to government data, almost half of whom use their phones to make payments. The number of Australians transacting in cryptocurrency has surged 63% so far this year, compared with last year.
Frydenberg said the government would begin consultation in early 2022 on establishing a licencing framework for digital exchanges, allowing the purchase and sale of crypto assets by consumers in a regulated environment.
According to Frydenberg, the government will also consult on regulating businesses that hold crypto assets on behalf of consumers, as well as the feasibility of a central bank digital currency.
A spokesperson for Afterpay, which has agreed to a buyout from Square Inc, the payments firm of Twitter Inc founder Jack Dorsey, said it supported “any approach that takes into account consumer benefits from the innovation and competition Afterpay has brought to the market”.
Apple declined to comment while Google had no immediate comment.
Gerard Brody, chief executive of the Consumer Action Law Centre, said regulating crypto exchanges would recognise those entities “are now holding significant sums of peoples’ money and investments”.
Regulating BNPL companies would “address the significant risk of debt and financial stress associated with these products,” Brody added in a statement.