Cryptocurrencies Becoming More Mainstream?
Steps have been taken this year in Japan and Norway towards the integration of digital currencies such as Bitcoin into the mainstream financial sector. Japan has amended financial laws to include coverage of digital currencies as a type of ‘prepaid payment instrument’, and an online bank in Norway has announced plans to offer clients the ability to link their bank accounts with cryptocurrency accounts.
On 1 April 2017, amendments to Japan’s Payment Services Act (PSA) took effect. The amended PSA gives digital currencies a formal definition, allowing them to fall explicitly within the regulatory framework. Digital currency is defined as a store of value that can be used as a means of payment, but is not a legal currency like the yen. These changes also more tightly regulate digital currency exchanges themselves by putting in place capital requirements for digital currency exchanges as well as cybersecurity and operational requirements. This has already started to have a practical impact. For example, Peach Aviation, a low-cost airline, has announced plans to become the first Japanese carrier to accept Bitcoin as a payment method for booking airline tickets.
Over in Europe, Norway’s largest online-only bank, Skandiabanken, recently announced plans to offer clients the ability to link their regular bank accounts with their account with Coinbase (a cryptocurrency exchange platform). Users will be able to view their Coinbase balances within the banking app, but will not be able to buy and sell cryptocurrencies directly through the app. Skandiabanken has said that it recognises digital currencies as an ‘investment class on an equal footing with other securities’.
These changes indicate cryptocurrency’s progress towards mainstream status. This includes in Australia. For example, 2017 Federal Budget papers includes planned changes to GST such that from 1 July 2017, purchases of digital currency will no longer be subject to GST.