Bitcoin has been quite the hot property in Australia over the past eighteen months, and it has caught the attention of the nation’s financial regulators, as it has in nations worldwide. In Australia, in particular, Bitcoin is very popular. Just not popular enough to threaten the status quo, according to the nation’s monetary policy regulators.
Australian regulators: We’ll let it go, for now
Dr. Anthony Richards is the head on monetary policy for the Australian RBA, their fiat currency central bank. He released a statement regarding the current stance of regulators towards Bitcoin:
“Given the very limited use and acceptance of digital currencies in Australia, digital currencies do not currently raise any issues for the bank in terms of the bank’s monetary policy and financial stability mandates,” he said. “The bank’s judgment is that the current very limited use of digital currencies means they do not raise any significant concerns with respect to competition, efficiency or risk to the financial system. Accordingly, it is currently unlikely that any benefits of regulation would outweigh the potential costs.”
Recent estimates show that Bitcoin has taken off in Australia and has been one of the world’s most fervent hotbeds for Bitcoin ownership and general use. This nation of fewer than 25 million people controls approximately 7% of the world’s Bitcoin market. This is enough to put $15 worth of Bitcoin into the wallet of every Australian. Even entire Australian towns are looking into making Bitcoin a key part of their economy.
“Digital currencies represent an interesting development in the payments and financial system landscape,” he said. “The concept of a decentralized ledger is an innovation with potentially broad applications for a modern economy; the banking leader continued. “In the event that the use of a particular digital currency was to grow significantly and to raise public interest concerns, the bank would consider whether it would be desirable and feasible to designate it as subject to regulation and to then impose standards on participants in that system.”
It is currently unclear what powers or other standards the fiat-currency based central bank can ethically impose on a decentralized digital currency. Since Bitcoin is not legal tender, is not governed by a central private company or individual, a little discussion about their power to regulate such a thing needs to be addressed in the future.
Over the past year, senators have held many a meeting about Bitcoin and the digital currency growth in Australia. Bitcoin leaders like Andreas Antonopoulos have made their case at the behest of the Australian Senate’s economics reference committee looking into the issue. Mastercard definitely does see Bitcoin as a major threat and made their presence and stance on the matter felt, as well.
Another possible factor in this revelation is that Australia has seen an opportunity to make some money from the Bitcoin pot in the form of a GST tax, creating a double taxation status due to taxes on transactions. Jonathan Miller, who is the co-founder of Bit Trade Australia, a major bitcoin trading platform, says the “double taxation” hitting bitcoin trades is forcing users of the currency to go offshore.
“That is ten percent more than buying bitcoins in other jurisdictions,” Mr. Miller said. “The net effect has been a shutdown of some businesses and a reduction in volume and trade in this jurisdiction.”
As Antonopoulos and others have noted, this is an opportunity for nations to either see Bitcoin as an opportunity for economic and job growth or to push the burgeoning market to more welcoming and forward-thinking locales. Australia seems eager to ride the fence of acceptance while taking a piece of the action, whenever possible.
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