PayPal Australia: Regulate Bitcoin Businesses, Not Individuals

A copy of PayPal Australia's submission to the Australian Senate inquiry into digital currencies held in late 2014 is now available. Contained within the submission, PayPal Australia argue that while an individual's use of Bitcoin should not be regulated, businesses which offer a service based on it should be.

PayPal Australia also urged Australian regulators to observe the distinction between its own service and Bitcoin so that any proposed legislation does not result in PayPal being caught up in it. PayPal's reasoning for this is that existing regulation already applies to PayPal's services whereas it currently does not for Bitcoin.

Included in the submission, PayPal Australia made the following recommendations to the inquiry:

  • Digital currencies should be clearly defined and regulated and recognised as financial instruments – this would facilitate more certainty and clarity of digital currencies and create more consumer protection.
  • Technology neutral regulation is preferable to ensure innovation is not stifled.
  • A registration process and licensing regime could be applied to companies providing digital currency financial services in Australia.
  • Regulators such as AUSTRAC, the Australian Securities and Investments Commission and the Reserve Bank of Australia could regulate digital currency financial services companies ies and provide effective regulatory oversight and prudential supervision of the development of digital currencies in Australia.
  • Digital currency financial services companies at a minimum should be subject to the AML/CTF Act.

One of the factors that has discouraged PayPal from adding Bitcoin as an additional type of currency in the PayPal wallet is the lack of clarity related to regulation of digital currencies:

"The rationale for this is that PayPal wants to ensure that while embracing innovation we remain committed to making payments safer and more reliable for customers – all users of PayPal are linked to a specific named PayPal account, with consumer protection for buyers, but identity and consumer protection are not built into Bitcoin today. Therefore, we are proceeding gradually, with some support for merchants in the U.S. who want to accept Bitcoin, while holding off on other aspects."

The inquiry is slated to hand down its findings as of the 2nd of March 2015.

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