The Reserve Bank of Australia could get expanded powers to regulate cryptocurrency services, the payments system, and digital wallets, under a plan announced today by Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones.
The RBA would also get the power to intervene to keep financial markets moving in the event of a crisis in the Australian Securities Exchange (ASX).
A consultation [pdf], which closes in February 2023, will form the basis of a strategic plan for the payments system.
The paper proposes increased regulatory power over digital wallet providers, which facilitate tap-and-go payments.
It states that the RBA could force digital wallet providers to use least-cost routing, where transactions are processed on the payment infrastructure that carries the lowest cost.
Giving the RBA regulatory power over the digital wallets could help break the dominance of Apple and Google over tap-and-go payments.
Australia's banks have long lobbied for access to near-field communications (NFC) chips on smartphone handsets to enable them to enter the digital wallet space in a big way. They infamously lost a 2016 battle to collectively pressure Apple to do so.
News reports indicate that the government's proposed changes could allow banks to enter the digital wallet market.
As well as the strategic plan, the government said in a statement it will consult on a ministerial designation power, so that if a payment service or platform presents “risks of national significance”, it will be subject to “additional oversight by appropriate regulator”.
Also under consideration are a new licensing framework for payment service providers, and regulations covering buy-now-pay-later (BNPL) offerings.
Financial market regulation
The government said it will respond to a series of reviews by the Council of Financial Regulators, and create a “crisis regime to enable the RBA to step in” to keep clearing and settlement services functioning in a crisis.
The resilience of Australia's market systems has been under question for some time, ever since the ASX suffered a near full-day outage in late 2020.
Regulators will get better licensing, supervisory, and enforcement powers, to reduce the risk of a crisis in Australia’s financial market infrastructure.
The Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC) will get additional powers to support competition in the clearing and settlement system.
“Rule-making powers will allow ASIC, with ministerial approval, to quickly act to make rules to manage matters related to competition, such as pricing, access, governance arrangements and interoperability," the government said.
Regulating cryptocurrencies
In the face of a widespread collapse in the cryptocurrency sector, the government said it will improve the regulation of cryptocurrency exchange providers.
A consultation paper in early 2023 will help the government decide which digital assets should be regulated by financial services laws, and help develop custody and licensing settings.
The statement said “the government will consult on a custody and licensing framework next year before introducing legislation”.
That will follow the release of a token mapping study currently underway.
