A fad or here to stay? ASIC, RBA, Aussie Minister on crypto prospects

Highlights

• Australia's Financial Services Minister Jane Hume has publicly backed cryptocurrency, saying the growing prevalence of crypto investment means the Australian government would embrace decentralised finance.
• ASIC chairman, on the other hand, says he’s not going to be a “cheerleader” for the crypto industry despite the extraordinary level of investment it is attracting.
• The CBA will roll out a pilot service in the coming weeks, which will include ten cryptos.

Cryptocurrencies have been on a wild ride this year, taking the world by storm. Australia too has not remained unfazed with the crypto juggernaut along with its stream of frequent developments rolling down under. Despite the authorities showing little enthusiasm towards crypto, it has continued its march towards mainstream, marked by major developments like Commonwealth Bank adding crypto services to its app.

However, crypto finds itself at a strange existential crossroads. Can it be the next big thing with such little regulation?

Interestingly, one of the voices in support of crypto has come from within the Australian government – with an Australia Minister saying that cryptocurrency is here to stay and that it’s not just a passing fad.

Australia's Financial Services Minister Jane Hume has publicly backed cryptocurrency, saying the growing prevalence of crypto investment means the Australian government should embrace decentralised finance.

Hume’s championing of crypto comes just as Australian watchdog ASIC warned investors of cryptocurrency to be careful, saying the regulator is still virtually powerless when consumers need intervention.

ASIC Warns Crypto Investors

Joe Longo became the chairman of the Australian Securities and Investments Commission (ASIC) in June this year – right on the precipice of this monumental change in financial history.

While he admits the level of investment he’s seeing in the crypto space is extraordinary, he says he’s not going to be a “cheerleader” for the industry.

Moreover, Longo has cast doubt over whether retail investors actually understand the digital assets they’re investing in.

As such, he advises great caution to investors when dealing with cryptocurrency.

The Minister and The Other Side

While the chairman of ASIC is warning people about the perils of what amounts to an unknown asset, the Minister of Financial Services is telling Australia to embrace the very same asset.

Yesterday, Jane Hume addressed the Australian Financial Review Super & Wealth Summit in Sydney, saying that an extraordinary 17% of Australians are investing in cryptocurrency.

She went on to say that crypto has captured the hearts and minds of Australians and added that it’s not going away anytime soon.

Hume also commended the Commonwealth Bank’s recent announcement to launch a crypto service to its existing app.

The CBA will roll out a pilot service in the coming weeks, which will include ten cryptos, including Bitcoin, Ethereum, Bitcoin Cash and Litecoin.

Hume used this to say the Australian government would “embrace innovation" in regard to decentralised finance.

The RBA Says Crypto May Have “Niche Use Cases At Best”

The Reserve Bank of Australia (RBA) is a lot less optimistic when it comes to cryptocurrency. Last Thursday, RBA head of payments policy Tony Richards said he could foresee potential dangers if the right set of circumstances were to come together in the cryptocurrency space.

One of these circumstances, he said, is the possibility that investors will eventually be less influenced by the novelty of cryptocurrency – referring to crypto as a “fad”.

He also outlined the environmental dangers that crypto mining has presented recently.

Richards concluded by touting the development of central bank digital currencies, saying cryptocurrency would have “niche use cases, at best".

So, Where Does Crypto Stand?

There’s no doubt crypto is in the midst of an existential crisis in Australia. All the exciting promises that crypto presents are being challenged by lack of security, its high energy usage and its perceived role in financial crime and the black economy.

On both sides of the equation exist fervent supporters, but perhaps what’s needed is a bit of temperance.