Australian Liberal Senator Calls for Stablecoin and Digital Yuan Regulation, Drafts Bill

Australian Liberal Senator Andrew Bragg has called for increased regulation of the crypto industry in the country to ensure national security. Speaking on Monday morning during a radio interview, the crypto-friendly senator noted that there was a need to form legislation around crypto exchanges, stablecoins, and Chinese banks dealing with the digital yuan in Australia.

Speaking about the e-yuan, he said:

“That currency, if it became widespread in the Pacific, or even within Australia, would give the Chinese state enormous power, economic and strategic power that it doesn’t have today.” Braggs said, adding, “So I think we need to be prepared for that. We need to know more about this digital currency, so the bill establishes reporting requirements in that regard.”

Australian Liberal Senator is set to introduce a private member’s bill concerning this at parliament’s next sitting. The bill is designed to “protect consumers, promote investment & protect our interests” by providing regulatory guidelines for the crypto industry. The bill is also aimed at facilitating the reporting of information by banks in Australia that deal with the digital Yuan. Consultation on the draft bill is open until 31 October and “community feedback” is welcome.

China was one of the first nations to explore the use of blockchain technology to create Central Bank Digital Currencies (CBDCs) and has been conducting limited trials. It has yet to fully launch the service, however. The Reserve Bank of Australia in August announced that it was working with the Digital Finance Cooperative Research Centre (DFCRC) to explore the potential applications of a CBDC in the country. The project is expected to take a year. Compared to China, which began such research as far back as 2014, Australia – and other economies – are far behind.

Bragg emphasizes that seeking regulation for the use of the foreign CBDC is not an “accusatory position but simply being “prepared and gathering information”. He does not see any benefit in the country having a CBDC but believes that the government should manage other CBDCs operating in the country. The Senator also revealed that the Governor of the Reserve Bank of Australia has “spoken before saying there needs to be regulation on stablecoins.” His draft bill calls for stablecoin regulation and making it an offense to issue stablecoins without a license. Bragg also commented on the recent collapse of the Terra stablecoin and how a similar situation can be avoided in the future. He said:

“What we’ve seen in the last six months or so has been the collapse of major stablecoins, including the US stablecoin Terra. The Governor of the Reserve Bank in Australia and Janet Yellen [the US Treasury Secretary] have been calling for regulation, so that if someone wants to issue a stablecoin, they are required to hold reserve capital to meet any risk.”

Given that the Liberal party is in opposition to the ruling Labour party, it remains to be seen if Senator Bragg’s bill will be passed.