The Reserve Bank of Australia (RBA) has discussed the need to regulate stablecoin usage in the application of DeFi for payments, and also noted the “considerable risks” associated with meme coins during its November monetary policy meeting.
In the meeting’s minutes, the RBA acknowledged innovations such as distributed-ledger and smart contracts could change the face of the financial sector but that it would likely rely on the use of stablecoins or CBDCs rather than cryptocurrencies. The RBA said:
… if stablecoins were to be used widely, they should be subject to regulation that ensured they were safe for users and promoted financial stability.
Reserve Bank of Australia members
In considering the future of digital assets in payment, the RBA hit out at cryptocurrencies, which it described as having “numerous shortcomings as stores of value or means of payment”.
The central bank said the risks and speculative nature of crypto investment was especially obvious when it came to “meme coins”, and noted warnings that investors caught up in the recent boom could experience large losses.
Crypto Risks a Focus Even As Regulators Explore CBDCs
Australia’s financial regulators continue to warn investors about cryptocurrencies, even as they tentatively consider the possibilities of CBDCs.
In August, the Australian Securities and Investments Commission (ASIC) reiterated its warning for Aussies to be wary of investing in unlicensed companies – that is, companies that do not hold an Australian financial services (AFS) licence or an Australian market licence (AML).
The RBA also used its November meeting to express its support for CBDC-related initiatives including developing a proof-of-concept of a wholesale CBDC in 2019 and the recently completed Project Atom, which explored the potential use of a central bank CBDC using distributed ledger technology in collaboration with blockchain company ConsenSys.
In addition, the RBA recently advertised it was seeking to hire people for a new cross-disciplinary “CBDC Research Team” to support the evolution of payments in Australia.