Financial Services Minister Jane Hume says cryptocurrency Luddits will hold Australia back

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As the financial review revealed this month, the Commonwealth Bank of Australia plans to allow customers to hold and use bitcoin and other cryptocurrencies through its banking app, marking what many see as a maturity for digital currencies.

Senator Hume will say that decentralized finance backed by blockchain technology “will present incredible opportunities – Australia must not be left behind by fear of the unknown.”

“Don’t be the person who thought the iPhone would never take off because people would rather have their music and phones on separate devices,” she said.

“Don’t be the person who was still doing their financial models by hand in 2001, instead of using Excel.

“Don’t be the person in 1995 who said the internet was just a place for geeks and criminals and would never become mainstream. And don’t be the person who argued that email was a passing fad.

“If the last 20 or 30 years have taught us anything, it’s that all innovation begins with a disruption and ends with a household name. “

She will reject calls by Labor, consumer groups and financial planning lobbyists to expand coverage of the government’s financial compensation scheme to include managed investment schemes and risky financial products.

A new federal last resort compensation scheme, responding to a key recommendation of the Hayne Royal Commission, is designed to compensate investors in limited circumstances where they acted on bad advice and cannot be compensated because of closing a business.

“Be ready to wear it”

The plan should not become an underwriter of insurance for any consumer who has lost money investing, Senator Hume will say.

“Why are these decisions so important? Because the cost of a blanket plan would inevitably also be borne by other investors – mom and dad investors and retirees.

“If you want to spend some of your savings on something speculative, knock yourself out. No government should stand in your way. But you should be prepared to wear it if something goes wrong.

The minister will point out that the equivalent scheme in Britain has increased from £ 243m in compensation in 2013 to £ 564m in 2020, and is expected to pay £ 1bn in 2022.

RBA’s Dr Richards warned investors in cryptocurrencies such as bitcoin that they risk holding speculative assets with “niche” uses that could lose value.

“I think there are plausible scenarios where a series of factors could combine to significantly challenge the current fervor for cryptocurrencies, so that current speculative demand could start to reverse, and a much of the price increases of recent years could be reversed, ”he said. said in a speech to the Australian Corporate Treasury Association.

These included targeting their excess energy consumption and a more intense focus on how they facilitate cash economy.

A parliamentary committee chaired by Liberal Senator Andrew Bragg presented an ambitious 12-point plan last month for Australia to take a leadership position in regulating the global digital economy.

The Senate report recommended developing a governance model that would allow companies to be run by an Internet community rather than by officers and directors.

The bipartisan proposals would see the Treasury acquiring the power to control cryptocurrency exchanges under a new category of financial markets licensing, creating protections for investors, including local custody rules.

Senator Hume’s financial review summit speech is not the first time she has advocated a hands-off, laissez-faire approach to digital investing; Nor is it the first time that it has opposed an independent regulator who wants to enter the booming decentralized financial market.

In May, she said Australians were smart enough to judge for themselves whether to invest their hard-earned money in higher risk assets.

Citing platforms such as TikTok, Facebook, Instagram and Reddit, Senator Hume said young Australians’ demand for content on investing, budgeting and finance was not diminishing.

“And while it’s frustrating for investment professionals to watch, at some point we have to let people make their own decisions… It’s a matter of personal responsibility and common sense,” he said. she declared.

The comments seemed at odds with concerns raised by the business regulator about misinformation and unlicensed investment advice online, and its impact on a growing cohort of young traders.

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