Major buy now, pay later company Afterpay has told a Senate fintech committee that a stablecoin based on the Australia dollar could enter the scene soon.
While there’s no such thing right now, Afterpay has reason to believe an AUD-backed stablecoin could be on the cards in the not-too-distant future, and it could be a good thing for Aussie crypto investors.
“There is currently no AUD-backed stablecoin with significant uptake. However, this is unlikely to remain true for long. An AUD-backed stablecoin would provide Australian cryptocurrency users and investors with an alternate store of value compared to the popular USD-denominated coins, with the associated benefits of blockchain technology,” Afterpay told the Senate Select Committee on Australia as a Technology and Financial Centre.
“It may also work to remove some barriers to entry into the cryptocurrency market for Australians consumers and businesses, as rationalising their cryptocurrency holdings in AUD over USD could provide additional comfort in exploring the space.”
Afterpay — which was recently acquired by Jack Dorsey’s Square — doesn’t currently offer crypto-related products, but is “actively considering how innovative features could be a part of the financial management ecosystem that we are building”.
According to Afterpay’s submission, “Merchants stand to benefit considerably from the cryptocurrency model, as card network fees are entirely removed from the equation … replaced by a single transaction fee associated with validating the payment on the blockchain.”
While Afterpay didn’t explicitly say it would create the coin, it asserted that a company will likely create a coin that gains “sizeable adoption”.
“At present, there is little to stand in the way of a private company (within or outside Australia) minting, marketing, and popularising an AUD-backed stablecoin,” Afterpay said.
“Similarly, an AUD-backed stablecoin could be created in a jurisdiction with minimal or no licensing or regulatory requirements, leaving it up to consumers to perform due diligence on the corporate entity that created the stablecoins.”
Basically, Afterpay is asking the Australian government to work with industry stakeholders to “actively consider what framework an optimal environment for an Australian dollar-backed stablecoin should look like”.
This includes regulation, “consumer-focused data protections” and clearer definitions of crypto-related terms.
“Current token definitions do not account for the following: Hybrid tokens; stablecoins (whether fiat-backed, commodity-backed, crypto-backed or algorithmic); Central Bank Digital Currencies; the rising prevalence of private tokens such as Facebook’s Diem; and Non Fungible Tokens,” it said.
The submission comes after Jack Dorsey asserted that Bitcoin was the key to world peace, a claim which he supported with precisely zero evidence.