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One of the country’s top regulators is urging banks, insurers and super funds to tread carefully with cryptocurrencies, as it seeks to give the industry more clarity about how to deal with digital assets.
As authorities grapple with the growing popularity of crypto assets, Australian Prudential Regulation Authority chairman Wayne Byres on Thursday said it would soon write to financial institutions setting out its high-level expectations for how they deal with digital assets, such as bitcoin or stablecoins.
APRA chair Wayne Byres said he wanted to give banks more clarity on the regulatory expectations relating to cryptocurrencies.Credit:Dominic Lorrimer
While the Commonwealth Bank is trialling cryptocurrency trading on its app, no other major Australian bank has sought to offer the digital assets to customers amid lingering concerns about regulatory or reputational risk.
Mr Byres said APRA was keen to give banks more clarity about its regulatory expectations, noting regulators overseas were also engaging with traditional banks about cryptocurrencies.
“The letter will not introduce new regulatory requirements. Much like our approach to climate risk, its underlying message is primarily one of ‘by all means innovate, but proceed with care and in full knowledge of the risks,’” Mr Byres said in a speech to the American Chamber of Commerce in Australia on Thursday.
Another “high priority issue” for APRA was the work being undertaken by several government authorities to develop a regulatory framework for “stored value facilities,” including stablecoins and digital wallets.
Stored value facilities allow customers to store funds in order to make future payments. Mr Byres said they can have similar features to bank deposits, but without the same level of consumer protection.
“Given it is difficult for consumers to understand and compare the respective risks, the playing field is not level,” he said.
CBA last year became the first major Australian bank to delve into the world of cryptocurrencies, in a move aimed at younger customers in particular. The bank has acknowledged the risks involved and the high volatility of crypto assets, and its move is attracting close scrutiny from regulators. Despite younger customers being a key target for banks, CBA’s major rivals have shown little interest in following the banking giant’s move.