Though Bitcoin companies are facing tough time as the tax authorities are tightening the noose around them for tax avoidance, the Reserve Bank of Australia believes the development of digital currencies like Bitcoin do not pose a threat to the financial system. Nonetheless, the BTC companies may now feel relieved as the bank is backing away from using regulatory powers to intervene or oversight the digital currencies.
The local media reports that a Senate inquiry has been told the central bank believes it is unlikely that any benefits of regulation would outweigh the potential costs. Therefore, according to the RBA’s head of payments policy, Tony Richards and the department’s senior manager David Emery, the use of digital currencies is very limited in Australia.
Placing his views Dr. Richards said that digital currencies do not currently raise any issues for the Bank in terms of the Bank’s monetary policy and financial stability mandates. Thus, fronting the Senate economics reference committee, which is inquiring into digital currencies to determine whether a regulatory or legislative response is needed, Richards said the bank was keeping a watching brief on the rise of digital currencies.
However, he also ruled out any immediate need to intervene and regulate its use. According to him given the very limited use and acceptance of digital currencies in Australia, digital currencies do not currently raise any issues for the bank in terms of the bank’s monetary policy and financial stability mandates.
Dr. Richards also admitted that the bank’s judgment is that the current very limited use of digital currencies means they do not raise any significant concerns with respect to competition, efficiency or risk to the financial system. Nevertheless, according to him it is currently unlikely that any benefits of regulation would outweigh the potential costs.
The New Stand is Contrary to the One Taken by the Tax Authorities
Elaborating the long established principled stand that while digital currencies are not legal tender, there is nothing to prevent two parties agreeing to settle a payment using a digital currency; he said that one area where the central bank sees digital currencies taking hold is in the area of international transactions.
However, according to Dr. Richards international transactions can be expensive and subject to delays in the receipt of funds. This stand is contrary to what the tax authorities in Australia have been saying that there are concerns over issues relating to taxation, anti-money laundering and counter terrorism financing rules and consumer protection, etc.
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