SYDNEY (CU)_Throughout the last month prices of Bitcoin, Dogecoin and other cryptocurrencies have been fluctuating significantly, as a result of tech tycoon Elon Musk’s flip-flopping remarks, among other reasons. May it be his jokes that Dogecoin is a “hustle”, or his sudden enlightenment that Bitcoin mining is not great for the environment, Musk’s behaviour has investors and analysts annoyed, to say the least.
However, it is not the twitterings of eccentric billionaires, nor the market volatility, that poses the greatest challenge to Australian cryptocurrency exchanges, it is the lack of regulation. In the Pacific nation, the Australian Securities and Investments Commission (ASIC) has classified digital currencies as “commodities” and not “financial products”. This means that cryptocurrency exchanges based in the country are not regulated and do not require a licence to function, which means they are unable to invest and innovate with certainty.
This, however, may be set to change, with an inquiry being launched into digital currencies. The committee, chaired by NSW Liberal Senator Andrew Bragg, will study the potential of developing a regulatory framework for digital assets including cryptocurrencies. Although some may claim that the idea of regulation and red tape may not be enticing, may major cryptocurrency exchanges are expected to welcome the move, particularly owing to the certainty that will be brought about as a result.
Experts point out that considering the lack of a clear regulatory framework, exchanges are reluctant to invest, expand and innovate. For instance, Australian cryptocurrency exchange CoinJar intended to launch an index fund, similar to those done by Vanguard. However, given the lack of regulation there the platform was unable to get the pick-up it expected. Nevertheless, the Australian cryptocurrency exchange is expected to introduce a cryptocurrency-based MasterCard which supports contactless payments and digital wallet platforms including Apple and Google Pay.
Some platforms are even said to be forging partnerships with providers of Buy Now Pay Later and cashback services. Against such a background, analysts point out that a regulatory framework is necessary to supervise the industry and to provide greater certainty.
“I imagine every bank in Australia and other developed markets are looking at crypto. They can see the opportunity, including from a technology point of view when it comes to innovative applications for blockchain,” Caroline Bowler, Chief Executive of Australian cryptocurrency exchange BTC Markets, said. “There’s a seat at the table waiting for crypto, once the regulatory conditions are right.”
