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Afterpay is looking into cryptos as a way of cutting payment costs for merchants. The company has reason to think that an AUD-backed stablecoin is not too far in the future. For Australia’s crypto investors, it seems like great news.
Laying Foundation for a Local Stablecoin
Jack Dorsey’s Square recently purchased Afterpay for AU$39 billion. At the moment, however, it is not offering crypto-related products.
An AUD-supported stablecoin would provide Australian cryptocurrency users and investment companies with an alternative value. They will have more blockchain benefits of blockchain compared to USD-denominated coins.
It can also cut some entry obstacles. Consumers and organizations venturing into the crypto industry can do so freely. In turn, there will be rationalizing for their crypto holdings in AUD over USD. The government may also develop more confidence in doing research, hence the growth of blockchain.
The traders benefit from the cryptocurrency model. It eliminates card network fees from the equation. What happens is that the whole process gets replaced with a single transaction charge.
Afterpay did not state that they would be creating the coin. However, it claimed it would probably launch a highly adopted currency.
The Government Should Research First
Today, there is little in the form of AUD-backed stablecoin minting. Also, the marketing by a private enterprise is going through the same.
The protection of Australian customers from bad players and fraudulent products is crucial. But, regulations in the sector cannot be met by way of investment product rules. Users can buy a token on an exchange today. Tomorrow, it could be a ticket that enables a token holder to access a DApp.
In a jurisdiction with minimal or no regulations, companies are freer to develop stablecoins. Consumers also have due diligence with the corporate organization that has established stablecoins.
As other countries are trying to come up with the best regulation strategies, so is Australia. There is still a lot of confusion on taxation and registration.
However, Afterpay is asking the Australian government to understand crypto first. It will allow them first to gain insights. Then create a conducive environment for an Australian stablecoin backed by the dollar.
Afterpay says that regulation is necessary to protect consumers. However, they should regulate it in such a way that there is room for fintech innovation.
It includes examining whether stablecoin issuers’ regulatory instruments are required. They will help maintain clear and appropriate prudential reserve holdings. Also, they will ensure consumer-focused data protection besides fair and appealing account blacklisting procedures.
Also, the government should look more into crypto-related definitions. The company believes defining a utility token is also necessary. It should cover user voting on the future operating procedure.