Afterpay calls for a policy that allows “stablecoins” to reduce payment costs

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Afterpay urges the government to work with industry and “actively consider what an optimal environment should be for an Australian dollar-backed stablecoin”.

Stablecoins are a form of digital currency whose value is tied to another asset such as fiat currency, reducing volatility and nullifying the practical use of crypto as a medium of exchange.

A stablecoin could be used to exchange values ​​on a blockchain without using existing payment tracks such as those operated by the global card systems where banks that issue debit and credit cards receive high interbank fees from merchants. It would also avoid users having to trade Bitcoin or Ether, the prices of which are very volatile.

“Merchants benefit significantly from the cryptocurrency model, as the fees for the card network are completely removed from the equation …

Lower costs

Blockchain has the potential to reduce transaction costs “due to the elimination of functions – real-time authorizations, chargebacks, billing – that require third parties to participate in the current payment system. Within the cryptocurrency payment chain, third parties such as card acquirers, card networks, infrastructure providers and banks (and their fees) are removed. “

Taking payments off the card rails would also increase Afterpay’s profitability, as it currently pays system fees as a registered merchant for the transactions it processes.

It proposed the creation of a task force between government and industry to develop “the best regulatory framework for cryptocurrencies and digital assets in general”.

Afterpay said policymakers should consider “the need for regulatory tools for stablecoin issuers to have transparent and adequate prudential reserve stocks, consumer-centric privacy, and fair and responsive account blacklisting processes.

“The goal is to provide stablecoin buyers with better protection over the value of their assets while driving Australia’s innovation and position as a global fintech leader.”

Reserve Bank’s head of payments, Tony Richards, told the same committee on Aug. 27 that the RBA was preparing to create a digital version of the Australian dollar for the wholesale market to facilitate the movement of assets on the blockchain. He said the RBA saw “the possibility that a case for a wholesale central bank digital currency could arise.”

For privately created stablecoins, Dr. Richards approved regulation because “we believe it is the responsibility of the public sector to ensure that they are safe and secure”.

“So if you see the emergence of stablecoins that could pose a systemic risk to the economy, I think you would see regulation to this end,” said Dr. Richards.

Without an official response, Afterpay suggested that private gamblers – possibly in a foreign jurisdiction – step in and “coin, market and popularize” an Australian dollar-backed stablecoin outside of the regulatory framework.

Large banks have shunned cryptocurrencies and have refused to prove most crypto companies because of concerns about money laundering risk. A major topic of the committee’s hearings on Wednesday will be whether such blanket denials are anti-competitive.

But Afterpay has highlighted the transparency benefits of blockchain, saying that its “decentralized, transparent and secure nature creates inherent consumer protection benefits, namely freedom from costs caused by third party involvement, unparalleled security and confidence in the ineradicability and immutability of Transactions and an open and transparent ledger that is immune to manipulation and censorship ”.

It recognizes “novel risks” for consumers, including loss of digital keys, burned transactions, and complexity, but notes the ability of distributed ledger technology to “bring significant benefits to global financial systems and allow consumers easy and fair access To enable financial services ”.

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