Australian Central Bank: Regulating Blockchain Protocols ‘Unlikely to Be Effective’

Cryptocurrencies don’t currently pose “pressing regulatory issues” for the Australian central bank’s policies for payments, two of its officials said last week.

Appearing before the Australian House of Representatives Standing Committee on Tax and Revenue, Tony Richards and David Emery – who both hail from the Reserve Bank of Australia’s payments policy department – discussed a range of issues, including the institution’s views on cryptocurrencies and blockchain.

Notably, the pair (in a prepared transcript of their statements) indicated that the central bank would likely not support any rule-making around the core protocols that make up blockchain networks.

The two stated:

“The distributed and cross-border nature of digital currencies like bitcoin means that regulation of the core protocols of these systems is unlikely to be effective.”

This sentiment is aligned with an earlier note from 2015, when the two gave another speech to the Senate. At the time, the central bank indicated that “any benefits of regulation would outweigh the potential costs.”

Indeed, the officials suggested last week that the central bank doesn’t see much need for regulating cryptocurrencies in the near-term.

“From the Bank’s payments policy mandate, digital currencies do not currently appear to raise any pressing regulatory issues,” they said.

The appearance also shined a light on how the Australian central bank sees the technology possibly taking hold – in particular, they highlight that industries with lots of intermediaries could capture the most benefits.

“The greatest potential is likely to be in sectors where workflows involve lots of different parties with no trusted central entity, and where current practices are quite inefficient,” the two said.

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