Virtual currencies, such as Bitcoin, have been in the news and growing in popularity.  Businesses now exist solely to help people transact using these new currencies and it is important to be aware of how they will be eventually regulated for business and insolvency professionals.

The recent report of the Senate Economics Reference Committee, ‘Digital Currency – Game Changer or Bit Player‘ has been tabled in the Senateand which deals with a proposed regulatory frameworks for digital currencies.

The report identifies a tension between the imperative to retain the integrity of the financial system while creating a regulatory environment that encourages innovation. In particular, there is a need to mitigate risks facing consumers and the broader financial system, while still encouraging innovation and growth in the industry by keeping the barriers to entry low.

The Committee has recommended that the government establish a Digital Economy Taskforce to gather further information on the uses, opportunities and risks associated with digital currencies. The result would be to enable regulators, including the Reserve Bank of Australia and ASIC, to monitor and determine if and when it is appropriate to monitor digital currency business.

In the meantime, the Senate committee supports the continued development of a self-regulation model, in consultation with government agencies as well as relevant stakeholders in the banking and finance payment sectors.

For more information contact ERA Legal.