Scaling Cryptocurrency Adoption in Australia
11 Oct 2022
Australia is making headlines lately with its upcoming development on crypto regulations. The nation is currently home to approximately 4.3 million crypto users.
According to Finder's Crypto Adoption September 2022 report, Australia stands at the 4th spot in comparison to 26 countries for crypto adoption. Bitcoin (BTC) is the most popular and preferred digital asset, followed by Ethereum (ETH) and Dogecoin(DOGE).
With such impressive levels of adoption,what are factors driving Australians to embrace cryptocurrency?
Factors Driving Crypto Adoption
Based on the report by The Independent Reserve Cryptocurrency Index (IRCI) on Australians' attitudes toward cryptocurrency, the influence family and friends have on 47.5% of Australians translated into cryptocurrency adoption on their end.
Other than that, the fear of missing out (FOMO) on trends and curiosity driven by mainstream media persuaded 44.4% of Australians to accept cryptocurrency. 33.2% of Australians viewed cryptocurrency as a means to earn passive income by diversifying one’s portfolio, while 21.6% of users planned to increase their wealth through crypto investments.
Factors Hindering Crypto Adoption
Despite Australia being at the forefront of digital asset adoption, the majority of Australians are still reluctant to accept cryptocurrency. As cryptocurrency is known to be volatile, this has unfortunately discouraged 36.5% of Australians from investing in cryptocurrency.
Meanwhile, about 28.5% of Australians find it challenging to understand the mechanics behind cryptocurrency and where to get started with trading. Another notable finding from the IRCI report suggested that some are still reluctant to embrace cryptocurrency due to the lack of consumer protection and regulation (24.8%). With all these concerns in mind, it begs the question, what could improve the adoption rates?
Factors That Could Enhance Adoption
For a newbie, it is needless to say that getting started in the crypto market can be overwhelming and challenging. As a result, some Australians suggest that having a solid opportunity to learn in-depth about cryptocurrencies will significantly improve adoption rates (34.3%).
Currently, there are no clear regulations on protecting consumers’ rights within the crypto space in Australia. 28.6% of respondents believe strict consumer protection and industry regulations will encourage further investments.
Interestingly, Australians highlighted that if businesses start accepting cryptocurrencies as a form of payment, it will drive the adoption rate significantly (9.9%). Doing so will allow users to have flexible payment options and to be confident in using cryptocurrency.
Cryptocurrency Regulation in Australia
Australian law has been very accommodating to cryptocurrency and its growth. There is tremendous support for fintech companies in Australia as the government prioritizes innovation. At the same time, the government has made it clear that it does not consider cryptocurrencies as an alternative to fiat currency. Instead, it is classified as a digital asset. Cryptocurrency and its exchanges were deemed legal in 2017. The laws implemented solely focused on transactional activities involving cryptocurrency.
However, regarding blockchain and Distributed Ledger Technology (DLT), there are still no clear-cut regulations at the moment. The long-awaited detailed framework is still currently in the making. With the upcoming guidelines, it is expected that cryptocurrency will be further adopted to attract investment and digital innovation to their nation.
The Future of Cryptocurrency in Australia
The Australian Reserve Bank announced on the 9th of August their collaboration with the Digital Finance Cooperative Research Center (DFCRC) on a research project to identify use cases for a central bank digital currency (CBDC) in Australia. The research project is to improve the bank's understanding of the technological, legal, and regulations associated with a CBDC.
On the 26th of September, the Australian Reserve Bank released a whitepaper dubbed the 'Australian CBDC Pilot for Digital Finance Innovation' to explain the objectives and approach in detail and how industry players can contribute to the research.
According to the whitepaper, Australia's pilot currency would be called eAUD. The project is expected to conclude by mid-2023. Michele Bullock, the Deputy Governor of the Reserve Bank, expressed the importance of collaborating with different industry players for this project to identify the benefits CBDCs could bring to the Australian economy.
Bullock was not alone in sharing this view. Dr. Andreas Furche, the CEO of the DFCRC, also emphasized that the research will help discover the economic benefits of a CBDC and how the bank can design it to maximize those benefits for consumers and the economy.
In line with Australia’s own CBDC’s plan, Andrew Bragg, a senator for the Australian state of New South Wales, submitted a digital assets bill proposal that identified that Australia should prepare for the adoption of China’s CBDC, the digital yuan.
The bill states seven Chinese banks located within Australia that could facilitate the use of the digital yuan. The bill also identifies the requirements for these banks to follow and the reporting system. Moving forward, Bragg intends to set up frameworks for crypto exchanges, custody services, and issuers of stablecoins through the implementation of his bill to ensure that Australia keeps up with the global race for digital assets.
All in all, Australians are optimistic about the future of cryptocurrency. They believe cryptocurrency will soon be widely acceptable for everyday use within their nation (41.5%), as per the IRCI report. Without a doubt, the ongoing research and development in Australia’s law will come to fruition, positively benefitting Australians in the coming years.
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