Election winner faces unfinished fintech business

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Whoever ends up as our next Treasurer may well take action on this front. The Coalition has repeatedly highlighted the power of Silicon Valley moving into banking, and Liberal Senator Andrew Bragg says there’s a “very strong case” for action on the NFC issue. “My view is that we should be busting open the platforms that restrain competition,” Bragg says.

Shadow financial services minister Stephen Jones also makes it clear Labor would make changes in digital wallet regulation. “We think that we need to ensure that we have a safe ecosystem where value is distributed fairly, and you can’t have over-the-top providers coming in, and just stripping value out of the system without making a local contribution,” he says.

Secondly, expect to hear more talk about the regulation of buy now, pay later companies such as Afterpay, many of which have largely avoided traditional rules that apply to banks and other lenders.

The Reserve Bank, for example, wants to give retailers the ability to add a surcharge for purchases made on Afterpay, which cost merchants much more to process than credit card payments. But the RBA doesn’t have the powers to do that, leaving the ball in the government’s court.

So, where will the next government land on Afterpay surcharging? Bragg and Jones are less clear on this issue, but it will need to be decided in parliament’s next term.

As consumer groups call for tighter curbs on BNPL lending, Jones has also said Labor would look into any “gaps” in the industry’s code of conduct.

Thirdly, and perhaps most fundamentally, our next Treasurer will inherit policy work that has started in the wild world of cryptocurrencies.

The government late last year said it would start consulting on the regulation, licensing and taxation of crypto businesses and assets in 2022, and it would also start consulting on the possibility of a central bank digital currency in the second half of this year.

These are technical areas that are also getting close attention from regulators globally, including here. The Australian Prudential Regulation Authority chairman Wayne Byres said in a speech this month that the growth in crypto assets and the prospect of CBDCs are probably “the most fundamental” changes in digital finance today. But, he added, it is still early days.

How will our next government approach the rapid growth in crypto assets?

Both the Coalition and Labor say they want to appropriately regulate crypto assets and encourage innovation, and Jones has also emphasised a desire to stamp out scam operators. But understandably, given regulators are still trying to get their heads around the crypto boom, we don’t know exactly how either side’s policies on crypto would work in practice.

As Byres’ speech noted, there are also limits to what governments can achieve through regulating crypto assets: much will ultimately depend on what forms of money the public choose to trust.

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