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On November 22, 2021, at the Australian Financial Review Summit in Sydney, the Australian Finance Minister stated that crypto was not a fad. Minister Jane Hume said that Australia needed to acknowledge it was not a fad or they risk being left behind. According to Hume, Australia should treat crypto “cautiously, but not fearfully.”
Opposition To Crypto By Financial Regulators
While Minister Hume appears to be in support of embracing the crypto sector, major regulators in Australia’s financial sector have not taken the same view. Recently, the Reserve Bank of Australia (RBA), warned of serious risks that come with investing in crypto. According to a speech by Tony Richards, Head of Payments Policy at RBA, existing cryptocurrencies did not meet the threshold required to be called money. Richards added that they were rarely used or accepted as a means of payment and were not used as a unit of account.
Another important financial regulator, the Australian Securities and Investments Commission (ASIC), has also made its opinion clear regarding crypto. It has advised investors to approach the crypto sector with great caution and not to put all their eggs in one basket. In essence, ASIC does not believe crypto investments should be anything more than a fringe investment in one’s total investment portfolio.
These statements by senior officials within Australia’s financial regulatory sector have led to something called “debanking.” It is a phenomenon where crypto startups are unable to access services in the formal financial sector of Australia due to fear of the unknown. The result is that many startups have been shelved or simply moved abroad.
Minster Hume Warns About Ignoring Innovation
Minister Hume stated that in the past three decades, it had become obvious that innovation begins as disruption and ends as a household name. In her speech, she stated that decentralized finance underpinned by blockchain technology would present incredible opportunities, and Australia “mustn’t be left behind by fear of the unknown.”
She gave the example of the iPhone and said that Australia should not become the people who thought iPhones would never take off since people wanted their music and phones separate. She also gave the example of the naysayers in 1995 who said the internet was geeks and criminals that would never become mainstream. Hume also pointed to the naysayers who said that email was just a fad, and warned Australia risked becoming part of those people who got it wrong.
Minster Hume commended the Commonwealth Bank of Australia for its decision to roll out crypto-asset investment services to its Australian customers. She also pointed out that a recent Senate Committee report had found that over 17% of Australians had invested in crypto. Hume noted that no matter what anybody thought, the technology was simply not going away.
Her speech comes just a few days after the government of Australia released a blueprint calling blockchain one of the 63 critical technologies. Her speech shows that there is genuine interest in crypto in Australia, especially decentralized finance. However, there is still a lot of fear and uncertainty when it comes to cryptocurrencies.
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