The spread and volatility of cryptocurrencies won’t bring down the financial system, a parliamentary committee has heard.
“It’s a risk to investors but it’s not a financial stability risk,” Reserve Bank governor Philip Lowe told parliament’s economics committee on Friday.
Assistant governor Michele Bullock said regulators still needed to grapple with privacy, consumer protections, and countering the use of Bitcoin and cryptocurrencies for money laundering and funding terrorism – and that’s not happening any time soon.
“There’s a lot of fuss over Bitcoin – it’s not a payment instrument and it’s not really money,” Ms Bullock said.
But she’s not completely old school about “money”.
“The issue that gets much more airplay recently is stable coins,” she said, referring to a type of cryptocurrency where the market value is tied to an asset such as gold or an actual currency.
The Reserve Bank is also working with other countries including the Swiss financial markets watchdog as it’s the main regulator for the Facebook coin Diem, formerly known as Libra.
“With those sorts of ‘coins’, as they’re so-called at the moment, nothing will happen until the regulators are happy,” she said.
Committee chair Tim Wilson noted that Dogecoin began as a joke and is now worth billions, but he urged people to “take heed” of Ms Bullock’s comments rather than follow his advice.
Doge surged 44 per cent overnight after Elon Musk tweeted just one word: “doge”. He followed up with: “I am become meme, Destroyer of shorts.”