Afterpay mulls crypto payments but says more regulatory certainty is needed

Senior Afterpay executives have told a Senate committee hearing that young Australians are hungry to use and save bitcoin, but more regulatory certainty is needed.

Afterpay executive Lee Hatton is bullish on bitcoin. Picture: James Croucher

Buy now, pay later darling Afterpay is considering incorporating cryptocurrencies including Bitcoin into its platform to meet the demands of younger Australians.

Afterpay vice-president Lee Hatton said the company — which is set to be acquired by US tech giant Square for $39bn — is hungry to increase its exposure to digital cryptocurrencies like bitcoin but that more certainty is needed.

“Cryptocurrencies and digital assets are an important new frontier in digital financial services, and if managed effectively have the potential to deliver economic benefits, but this needs to be done in a way that is safe and inclusive,” Ms Hatton told a senate committee hearing into the local nascent crypto sector.

“For example, most surveys find that women are much less likely to buy crypto assets. In addition, consumers need to understand the risks with new financial products and be protected from the risks they can‘t control,” she said.

“The good news is that in Australia we are well positioned to take advantage of these things in terms of jobs, competition and innovation. We have a well developed financial system that has powered our economy for the past decade, and we’ve produced a number of global unicorns in the financial space such as MYOB.”

Afterpay doesn’t currently offer cryptocurrency payments or the ability to invest with them. But Ms Hatton said that such a move would be common sense with the right regulatory framework in place locally given rampant demand particularly from younger Australians.

Australian politician Senator Andrew Bragg is leading a Senate hearing into fintech and cryptocurrency. Picture: Gary Ramage/NCA NewsWire

“A number of large players are moving in this direction and if history is our guide it will be the countries that recognise the potential of this new technology to facilitate innovation that will reap the rewards,” Ms Hatton said.

“Once we’re able to understand the regulatory framework, we can absolutely see where our customers are going. In some ways a stablecoin is like the evolution of a loyalty currency, you completely control it. For us, our customers have asked us to really support this on this whole savings front.

“And as I see it, we will absolutely see a part of our customers starting to leverage [bitcoin] and we would absolutely be looking for a way to support them to do that.”

Square, which is set to acquire Afterpay in the largest corporate transaction in Australian history, reportedly owns around 8000 bitcoins itself and its founder Jack Dorsey is a big believer in the technology.

Afterpay’s vice president for public policy and communications Damian Kassabgi threw his support behind the concept of an Australian government-backed stablecoin, which would have its value pegged to the Australian dollar, and therefore be less volatile than other digital currencies including bitcoin.

“It is not hard to imagine a world where a privately issued stable coin that is pegged to the Australian dollar, one that passes from consumer-to-consumer or consumer-to-merchant with very little friction where the traditional payment rails are not used, where interchange fees are close to non-existent, and where there is no commercial bank as an intermediary.

“There are many benefits to this future outlook. However, there is work to be done to create a safe and efficient regulatory environment. As part of this, the Australian government is right to consider the benefits and risks of issuing its own central bank digital currency, as is being tested in real-time in other parts of the world.”

The pair’s appearance at the senate committee hearing comes as tiny and impoverished El Salvador became the first country in the world to adopt bitcoin as legal tender. The move allows Salvadorans to use the cryptocurrency to buy a cup of coffee, get a haircut or even pay taxes and home loans.

El Salvador on Tuesday becomes the first country in the world to accept bitcoin as legal tender, despite widespread domestic scepticism and international warnings of risks for consumers. Picture: Marvin Recinos/AFP)

The administration of President Nayib Bukele, who is 40-years-old, plans to spend more than $US225m ($A305m) on the rollout. It included a $US30 credit in bitcoin to those who take up Chivo — local slang for “cool” — the government-run e-wallet that can be used for purchases in bitcoin or US dollars.

The senate committee’s chair, Liberal senator Andrew Bragg, said there are no companies on the ASX today with a heavy exposure to digital assets and blockchain, in comparison to the Nasdaq for example which hosts a number of large cryptocurrency players including Coinbase.

“That is a big risk for the country. No one seriously believes that will remain the case in 10 or even five years,” Mr Bragg said.

“If their transaction is approved, the combined Afterpay-Square will be the first listed digital asset backed company. They won’t be the last. The challenge for Australia is to ensure we have a competitive offering to capture innovation and jobs.

“The competitive environment can be driven by Canberra in collaboration with industry which is exactly what the Senate committee is striving for.”

Originally published as Afterpay mulls crypto payments but says more regulatory certainty is needed