Reserve Bank of Australia Issues Statement on Cryptocurrencies and ICOs

In the last couple of months, numerous banks and governments have issued warnings about digital currency use and the associated risks. The Reserve Bank of Australia (RBA) is the latest to do so, having stated that it doesn’t expect digital currencies to see mass adoption anytime soon.

RBA Head of Payments addresses House of Representatives

In a speech to the House of Representatives Standing Committee on Tax and Revenue, the RBA’s Head of Payments, Tony Richards, discussed a possible legislative framework that could be adopted as a response to initial coin offerings (ICOs), and issues pertaining to illegal digital currency use, mentioning that digital currencies pose issues for law enforcement authorities.

Richards said: “The use of bitcoin and other digital currencies as an actual method of payment remains relatively limited in Australia, as elsewhere . . . From the Bank’s payments policy mandate, digital currencies do not currently appear to raise any pressing regulatory issues.”

Following a report released by the Australian Securities and Investments Commission (ASIC), it is believed that most of the ICOs taking place within the country may be subject to not only licensing and registration but also disclosure requirements in the future. According to Richards, “Some issuers disappear as soon as they’ve finished fundraising, which means that these types of ICOs are actually scams.”

So far, it seems that there is no pending regulation for either digital currencies or exchanges, yet the RBA representative noted that tax authorities plan to keep a close eye on them to help prevent their use in illegal transactions.

However, Richards also drew attention to the potential benefits associated with the blockchain network:

“The greatest potential is likely to be in sectors where workflows involve lots of different parties with no trusted central entity, and where current practices are quite inefficient . . . some frequently suggested financial sector use cases include correspondent banking and ­remittances, as well as trade ­financing.”

Based on everything outlined here, what are your thoughts on the RBA’s statements? Will they lead to further development of a legislative framework regulating digital currency use in Australia? Let us know your thoughts in the comment section.