Merry Crypto-Christmas

By Business SA, Chamber of Commerce and Industry Chief Executive, Martin Haese.

Published in The Advertiser SA Business Journal on Tuesday 14 December 2021.

That old saying that 'there is nothing more certain than death and taxes' might need an update given the certainty of change experienced through COVID-19. Words such as 'pivot', 'agile' and 'remote working' are common vernacular these days for business decision-making. Another significant change facing the business community is the growth of cryptocurrency. While this is not new, the Australian Government has recently announced that they are looking at greater regulation of this space within the Australian business jurisdiction. So, what does this mean for South Australian businesses? The recently released Bragg Report is 168 pages of not-so-light reading but is certainly comprehensive as you would expect. In preparing the recommendations for cryptocurrency, the Senate Select Committee 'engaged deeply with industry players, peak bodies, academics and regulators on these issues'.

With an opportunity like this, there is often a degree of risk. As the peak body for business in South Australia, we advocate for our members to take advantage of all opportunities to help their business grow. Last week, Federal Treasurer Josh Frydenberg said the Australian Government planned?to legislate 'the largest reforms to our payments systems in a quarter of a century including a crypto-asset reform plan that would place Australia among a handful of lead countries globally'.

While we expect little to change between now and the Federal Election, the upcoming break provides an excellent opportunity for business owners to consider what this means to them. For South Australian exporters, what does it mean for your international trade if you are or not offering payment in cryptocurrency? What are Australian consumer preferences to purchase using cryptocurrency and how does the government protect Australians from falling victim to scams using a decentralised unregulated digital currency?

Currently, the Reserve Bank of Australia does not recognise cryptocurrency as a legitimate currency. In the minutes of their November monetary policy meeting, the RBA published the view that cryptocurrencies have ‘shortcomings as stores of value or means of payment’, referring to price fluctuations in well-known digital assets like Bitcoin. In their submission to the Bragg Report, the RBA stated that the 'consensus is that existing cryptocurrencies do not provide the key attributes of money, as they are rarely used or accepted as a means of payment, are not used as a unit of account, and their prices can be very volatile so they are a poor store of value'. However, the RBA may need to update their policy position in the future as the technology evolves quickly and consumer preferences change.

The International Monetary Fund is wary of cryptocurrency’s ability to bypass traditional constraints between countries, warning the borderless payment system could soon become a problem for those in power with the responsibility to manage economic systems.

Whatever your own views about the future of cryptocurrency, if you are in business, you will need to educate yourself about it. It is a disruption and game-changing platform and its trajectory is not dissimilar to the origins of the Internet. Take yourself back to the early days of dial-up and the new opportunities that e-commerce presented to the business community. What seems foreign at first has a habit of soon becoming commonplace.

There were plenty of discussions and cautious steps taken toward embracing the digital world that we now take for granted. Cryptocurrency presents us with similar challenges; it is a profound change that could usurp our traditional financial systems. Business SA encourages you to download the Bragg Report and take some time to think about what this might mean for your business. The Bragg Report outlines enormous potential economic opportunities for Australia if we can create 'a forward-leaning environment for new and emerging digital asset products' with a 'robust policy and regulatory framework that protects consumers, promotes investment in Australia and delivers enhanced market competition.'