Huge changes coming to cryptocurrency and ‘buy now pay later services’

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 will tell the Australian-Israel Chamber of Commerce (AICC) 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 now 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,” he will say, joining fellow Liberal Jane Hume who says crypto is ‘not a fad’.

Early next year, he 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.

Work on a retail central bank digital currency (CBDC) will start with advice on pilot before the end of 2022, according to speech notes seen by AAP.

The Board of Taxation will advise on a new policy framework for the taxation of 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 now make payments using their mobile phone and COVID-19 has accelerated the use of digital wallets.

Around 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 be tasked with looking at fees, transparency and competition in the market.

At odds with decentralised finance that tries to take back control from institutions, the treasurer says centralising oversight of the payment system will give the government a greater leadership role, including new powers for him to intervene.