Increased calls for Bitcoin regulation have been rampant globally, with several government officials and policymakers bringing up the assets’ possible effects on financial stability. In Australia, however, regulators aren’t particularly alarmed over this problem.
Much Ado About Nothing
Earlier today, the Australian Financial Review reported that the Reserve Bank of Australia had been dismissive about concerns over Bitcoins’ perceived risk for financial stability.
Speaking at a meeting of the House of Representatives Standing Committee on Economics, Michelle Bullock, the agency’s assistant governor for financial systems, explained that most of the “fuss” about Bitcoin was unwarranted, and that the asset’s impacts on the financial system were exaggerated.
Per the report, Bullock explained that Bitcoin has not yet fulfilled its potential as a payment vehicle. Thus, it doesn’t precisely fit the bill to be called money. The policymaker added that while Bitcoin does have a great deal of volatility about it, she doesn’t believe that this will affect the Australian financial system in any substantial way.
Bullock added that most of the perceived issues that regulators are bringing up surround stablecoin regulation. This is thanks to the proliferation of stablecoin projects like Facebook’s Diem (formerly Libra), regulators have come to find that private stablecoins could function as money. With much talk about regulation already going on, lawmakers and regulators simply won’t stop complaining until they are satisfied.
Regulation Calls Grow Over Criminal Ties
Whether related to stablecoins or not, there is no doubt that the calls for crypto regulation have been mounting significantly over the past few months. However, most policymakers have focused more on the assets’ propensity for conducting criminal activities.
Last month, Christine Lagarde, the President of the European Central Bank (ECB), called for global regulations on Bitcoin in an interview at the Reuters Next conference. As she explained, Bitcoin has been used in the past for conducting “funny business,” and regulators will need to ensure that the asset falls under greater oversight.
“[Bitcoin] is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity… There has to be regulation. This has to be applied and agreed upon […] at a global level because if there is an escape that escape will be used,” she said.
Janet Yellen, the new Secretary for the U.S. Treasury, also alluded that cryptocurrencies could be a particular anti-money laundering (AML) and counter-terrorist financing (CFT) concern. Speaking at a confirmation hearing from last month, Yellen claimed that the government would need to ensure that cryptocurrencies’ use in transactions is examined, and that government policies evolve with the prevalent technology.