Following Coinjar’s exit from Australia to avoid its tax burden, MasterCard is petitioning lawmakers to enforce greater regulation of digital currencies in the country.
A submission by Australasia Division President Eddie Grobler argues the need for “developing an effective regulatory scheme that also protects society against criminal activities and also provides consumers in Australia with safety, stability and reliability when transacting with digital currencies,” local technology portal Computerworld.com.au reports.
Grobler describes concerns regarding the reliability of Bitcoin across several spheres, primarily concerned with security and “consumer protection.” Like much of the criticism we have already seen from the financial sector, the submission cites the potential for Bitcoin to be used by criminal entities as a source of major concern. Grobler states:
“Contrary to transactions made with a MasterCard product, the anonymity of digital currency transactions enables any party to facilitate the purchase of illegal goods or services; to launder money or finance terrorism; and to pursue other activity that introduces consumer and social harm without detection by regulatory or police authority.”
He adds that “the existence of a block chain does nothing to allow law enforcement, other government authorities or the public to identify the real identity of the parties to a digital currency transaction,” citing Mt. Gox as the primary example.
While factually less provocative, the bulk of Grobler’s review contains basic arguments reminiscent of those used in a recent report by Citibank to the Swiss government, which argued the “superiority” of paper currency over gold and Bitcoin.
Regulation, Grober argues, is necessary “for Australia to take a market leadership position.” This should come in the form of “a requirement that all transactions go through regulated and transparent administrators subject to supervision by Australia authorities (rather than just the current block chain process),” “protections for the consumer (e.g., reversal of unauthorized charges and consumer complaint processes),” and procedures such as KYC, which are already extant in the Bitcoin realm.
The recommendations highlight a persistent misunderstanding of the fundamentals of blockchain technology itself from the traditional finance industry. The concepts of centralized transaction monitoring and reversal of charges for a blockchain-based digital currency may indeed strike many as nonsensical.
While Citibank even described Bitcoin as “fiat currency,” MasterCard appears at least somewhat more measured in its petition.
However, having cited the recommendation by the European Banking Authority (EBA) that “national supervisory authorities discourage credit institutions, payment institutions and e-money institutions from buying, holding and selling digital currencies,” it is telling that Coinjar’s relocation to the UK does not reflect MasterCard’s judgments.
Its criticism comes in light of Andreas Antonopoulos speaking out against credit card company policies last week as part of his first visit to Australia at a Bitcoin meetup in Melbourne.
“The more you use your [credit] card, the more you give your secret keys to every merchant,” he explained. “They then store them and build giant databases of fifty to sixty million of these secret access codes to everybody’s credit accounts. Then they act with surprise and shock and dismay when a hacker […] steals all credit cards out of their super secret database.”
Whether tax authorities will consider altering the need for digital currency exchange and handling entities to comply with general sales tax (GST) may well depend on their continued success in the EU and elsewhere.
Regarding the GST, Antonopoulos explained:
“By doing regulation in that way, Australia’s not making Bitcoin slow down, what they’re doing is making Bitcoin move out.”
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