Australia to Regulate Crypto Sector as Part of Payments Reform

Australia to Regulate Crypto Sector as Part of Payments Reform

The government of Australia is preparing to comprehensively regulate the activities of cryptocurrency exchanges and custodians. The push is part of a major overhaul, aimed at preserving the country’s sovereignty over its payments system, which will also affect providers like Apple and Google.

Payment Laws in Australia to Cover Crypto Business and Big Tech

Authorities in Australia are gearing up to update the nation’s legislation governing payments in the largest reform of the industry in over two decades. The changes will expand the regulatory framework to encompass new payment processors in the online space including those dealing with cryptocurrencies.

Australia to Regulate Crypto Sector as Part of Payments Reform

In 2022, the government will begin consultations on the establishment of a licensing framework for crypto exchanges and the regulation of platforms holding digital assets on behalf of clients, Reuters reported. Canberra also wants to explore the feasibility of a central bank digital currency (CBDC) issued by the Reserve Bank of Australia.

With a daily number now reaching 55 million, non-cash payments, including crypto transactions, have spiked during the Covid-19 pandemic as many Australians have turned to online options. Close to half of them are using their phones to make payments while in 2021 those transacting in crypto have increased by 63% over the previous year.

Australia’s plan to broaden its payment regulations also aims to cover online transaction processors such as Apple and Google as well as buy-now-pay-later providers like Afterpay. The goal is to put an end to their unsupervised operations in the country. Speaking on the need for the amendments, Federal Treasurer Josh Frydenberg warned:

If we do not reform the current framework, it will be Silicon Valley that determines the future of our payment system. Australia must retain its sovereignty over our payment system.

Google and Apple have so far refrained from commenting on the announcement but a spokesperson for Afterpay has been quoted as stating that the company supports “any approach that takes into account consumer benefits from the innovation and competition Afterpay has brought to the market.” The platform has agreed to a buyout from Twitter founder Jack Dorsey’s payments firm Square, Reuters noted.

Australia’s move comes at a time when a number of other major economies are taking steps to determine their regulatory policies regarding financial innovations, including cryptocurrencies. Unlike China and India, for example, Australia is preparing to take a more inclusive approach similar to that of the United States, the report suggests.

Do you think the Australian government will adopt crypto-friendly regulations? Share your expectations in the comments section below.

Gasoline Payment Gripes Are not Exceptional to Ethereum

A couple weeks back, the debate above Ethereum’s superior gasoline service fees and usability heated up once again, at a time when rival good contracts networks like Solana and Avalanche are gaining traction.

But gasoline service fees are probable to stay a large problem in DeFi—no subject which chain you use.

Ethereum, the very first and most well-liked wise deal-enabled layer-a person blockchain, is exceptionally highly-priced to use. Uncomplicated token swaps on decentralized exchanges can expense hundreds of bucks, permit by itself additional advanced DeFi exercise like yield farming.

And this is not a particularly new phenomenon. If you keep in mind back again in 2017, a exciting minimal crypto sport named CryptoKitties went viral and wreaked very similar havoc on Ethereum’s gas costs.

Fortunately, gas fees finally receded. These days, they are back again with a vengeance.

In actuality, throughout this bull current market, which we could say started off about January 2020, expenses on Ethereum have remained a distressing topic of discussion for buyers. There have definitely been spikes and drops, but the average price tag of gasoline has never been this high for this long. That is for the reason that as the bull operate proceeds, additional people pile into the community each individual day.

ethereum gas fees
Fuel costs on Ethereum considering the fact that January 1, 2020. Resource: Etherscan.

This narrative has naturally been a large boon for competing layer-one particular networks, specifically Solana and Avalanche. They pitch an similarly prosperous crypto working experience as Ethereum, minus the prohibitive price of transacting.

And, for the most component, these networks have built fantastic on their guarantees.

A batch of the most current transactions on Solana has a charge of just .000005 SOL or, at today’s rates, $.00107, a portion of a penny. On Avalanche, the price tag of transacting is also very low, with the normal transaction price hovering at all around 58 nAVAX, or $.0000064525. Just 1 nAVAX equals .000000001 AVAX, by the way.

For context, depositing just 50 USDC on the well-liked lending and borrowing company Aave as a result of Ethereum at present fees about $156.

Aave deposit fees
by way of Aave

The very same transaction on Avalanche costs .01007 AVAX, or $1.13. Kevin Sekniqi, Avalanche’s COO, has also stated that the charge estimates proven on well-known crypto wallets are incorrect. So even that $1.13 may be a little bit significant.

Avalanche fee
through MetaMask

If you just joined crypto and only now catching up with this dialogue, choosing among the two chains is rather quick. Paying around $1 alternatively of much more than $100 for the same services is a no-brainer.

But if you’ve been in the Avalanche ecosystem for the past 3 months, you might continue to be a little bit irked.

“Almost [$2] for [a] small transaction on Pangolin,” wrote a Redditor again in August when applying Pangolin, a decentralized exchange on Avalanche. “Seems like [no one] talks about this. Is it just me who [minds]? How do you want to make P2E video games on this? Will go back again to [a] reduce fees chain prob.”

A further wrote, “I’m extremely impressed with the velocity of this network, but in terms of charges Polygon and Kucoin networks are significantly significantly more affordable. I make in excess of 1,000 transactions/week so AVAX in [its] present-day point out [it’s] just not for me.”

Sound common?

It’s in essence the exact dialogue the Ethereum group has been owning because the community encountered this problem in 2017. And if Avalanche continues to acquire a lot more of the market place, you can be expecting to see quite a few of these very same issues going ahead. Sekniqi has himself also admitted that he doesn’t be expecting Avalanche “to retain thousands of [transactions per second] at low expenses.”

And, just like Ethereum, Avalanche has a scaling option for this difficulty.

Termed “Subnets,” these are equivalent to sidechains on Ethereum in that they batch action away from the network’s mainnet and allow for for better throughput and decrease prices. There’s a large amount far more to unpack pertaining to the similarities and distinctions among these two chains, but I think you get the gist of what is happening below.

These varieties of networks are fundamentally fee marketplaces, in which transactions contend for block room to be processed. As that block space fills up thanks to an maximize in exercise, this market place becomes all the much more competitive.

If you are taking part in this sport, like Avalanche, Solana, and Ethereum all are, then one of the principal methods to reduce this competitiveness is to enhance the block sizing (but there are, of class, other people). This is roughly what Solana and Avalanche have performed.

The trade-off right here is that getting a node operator or validator in these a community has a lot larger components needs mainly because people blocks make up a ton of details. This could result in a centralization chance as more compact players are fundamentally priced out from becoming a node operator or validator.

In any case, no make a difference how you slice it, a lot more activity inevitably begets bigger selling prices.

And to provide this concept to a head, if we’re to consider that blockchain technological know-how is to underpin all economical marketplaces, then the recent design and style landscape signifies the future is most likely likely to be expensive.

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