As part of a submission to the Senate Select Committee on Financial Technology, the Australian Prudential Regulation Authority (APRA) has announced it will now be overseeing stablecoin projects such as Facebook’s Libra coin.
The APRA, which is part of the Australian Council of Financial Regulators, has formed the Distributed Ledger Technology Working Group to monitor and examine new developments in the decentralised finance space.
The report by the APRA covers a wide range of topics, including consumer protection and oversight of banking providers, credit unions, and insurance companies.
The regulator’s role will now include the oversight of blockchain projects and online digital asset wallets.
Officials claim that as part of these new measures, Facebook’s Calibra ecosystem and its associated digital asset Libra could fall under the APRA’s remit – especially if Facebook stores users’ funds in a central wallet and subsequently becomes a custodian of those funds.
Discussing the DLT Working Group’s role, the report reads:
“It is aimed at aligning supervision and regulation of blockchain technology used in finance. For example, this group has examined supervisory considerations and risks associated with the creation of the Libra platform and other stablecoins.”
The regulator explains how digital wallets are increasingly being used as part of the modern financial system, either to store value on behalf of customers or to facilitate payments with online merchants.
As a result, the APRA has stated that its framework for regulating digital wallets requires updating to “reduce complexity” and “foster innovation” in the consumer digital asset space.
Australia welcoming of blockchain technology
Regulators and financial institutions in Australia have largely been welcoming of blockchain technology, exploring its usefulness within the country’s wider economy.
Earlier this month, Coin Rivet reported that the Reserve Bank of Australia (RBA) had launched a pilot project on the Ethereum blockchain with the intention to launch a central bank digital currency (CBDC) for the nation.
The proof of concept, which was developed in the RBA’s blockchain innovation lab, used the new CBDC to transact with several Australian commercial banks.
However, at the time, the RBA questioned how useful Facebook’s Libra coin would be to the Australian economy, predicting a low demand for Libra compared to other payment options.
Last year, Australia launched its own national blockchain strategy to ensure that the country isn’t left behind on the international blockchain scene.
You can read more about Australia’s blockchain industry here.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.