Stablecoin framework is a priority for Australian regulators

Australia is preparing to regulate stable coins as they become more used as a means of payment.

Australian financial regulators are working on options for incorporating payment stablecoins into the regulatory framework for stored-value facilities.

Reforms to the payments regulatory framework in the country would be a part of this.

The Reserve Bank of Australia published a report on stable coins, assessing their recent developments, risks and regulatory prospects.

Stable coins have the potential to enhance the efficiency andFunctionality of a range of payment and other financial services, despite the high attention given to risks.

According to the study, Australian authorities are “doing a lot of work” to figure out how to integrate stablecoins into the national payment system without subjecting it to excessive risks.
Among these risks, authors list energy and climate-related impacts, disruptions to funding markets, increasing bank risk, and liquidity risks.
authors emphasized the particular fragility of algorithmic stablecoins, whose stability is dependent on investors’ confidence in the value of an unbacked crypto-asset, and cited Terra’s failure as an example.

The report continues that the CFR should prioritize developing a framework for payment stablecoins in the near term, “with the possibility that these arrangements will be widely used as a means of payment and a store of significant worth,” as per local Representative Andrew Bragg, who released a draft bill in September titled The Digital Assets (Market Guideline) Bill.

The proposal calls for the development of licenses for digital asset exchanges, digital asset management services, and stablecoin issuers.