‘It’s not money’: Bitcoin has ‘no role’ in the Australian economy, says Bullock

Reserve Bank governor Michele Bullock has poured cold water on cryptocurrency, saying it has no role in the Australian economy or payments system even as bitcoin rallies to new highs on the back of Donald Trump’s victory in the US presidential election.

Speaking at the Australian Securities and Investments Commission annual forum on Thursday, Bullock pushed back at suggestions that bitcoin, which is fetching nearly $140,000 a coin, was an “alternative currency”.

RBA governor Michele Bullock says she sees no role for cryptocurrency in the Australian economy.Credit: Louise Kennerley

“Don’t call it an alternative currency,” she said. “It’s not a currency, it’s not money, it’s being used as some sort of asset class.”

Despite the hype around cryptocurrency, Bullock – who previously headed up the bank’s payments arm – said she didn’t see a role for it in the economy.

“I don’t understand it,” she said. “But, you know, I don’t really see a role for it in, certainly in the Australian economy or payments system.”

Trump has promised to make the United States the “crypto capital of the planet” with tech supporters such as Elon Musk strongly backing the move.

A proposed law was introduced into the US Senate this year to create a “strategic bitcoin reserve” to cut America’s soaring official debt, which has surpassed $US36 trillion ($55.6 trillion), by buying 1 million bitcoin over the next five years.

Trump told a bitcoin conference in July that he would create the strategic reserve.

ASIC chair Joe Longo dismissed the recent rally in bitcoin and other crypto assets, saying it was an example of “the bigger fool theory”: the idea that people can make money on overvalued assets if those assets can later be resold at an even higher price to a bigger “fool”.

Meanwhile, Future Fund chief executive Raphael Arendt said the strategic reserve made little sense for a country whose currency was used around the world.

“If I was the controller of the world’s reserve currency, and I could print as much of it as I wanted, and I had a budget deficit ... I’m not sure why I would want a strategic reserve of any currency, let alone one I didn’t control or understand,” he said at the forum.

Bullock also cautioned against reading too much into the results of the US election, during which Trump promised to impose tariffs of between 10 and 20 per cent on all imported goods and up to 60 per cent of Chinese-manufactured products.

“We don’t actually know what will happen,” she said. “We don’t actually know what he will implement and what the administration will implement. We can’t be jumping at shadows.”

The RBA’s most recent research into the nation’s payment system, released late last year, confirmed cryptocurrencies are not often used for traditional payments.

Just 2 per cent of people surveyed had made a payment with a cryptocurrency in the past year, although 11 per cent said they held some form of cryptocurrency.

Meanwhile, the Australian Bureau of Statistics reported on Thursday that the unemployment rate was steady at 4.1 per cent in October as the economy continued to add more jobs – though by the smallest amount since March.

The country added 15,900 jobs last month, while the number of unemployed people rose by 8000. NSW lost 19,000 jobs and Victoria lost 700. Queensland added 38,000 jobs.

Treasurer Jim Chalmers said while the labour market was softening around the edges with more modest employment growth last month, it remained resilient.

“Wages are growing, inflation is falling and more than a million jobs have been created under the Albanese government which is a record for a parliamentary term,” he said.

The unemployment rate remained about 0.6 percentage points above its recent historical low of 3.5 per cent in June 2023.

KPMG chief economist Brendan Rynne said increases in labour supply, both from migration and additional Australians entering the workforce, were being consistently absorbed by businesses and government.

“The relative buoyancy of Australia’s labour market has provided a steadiness both to wages growth and the unemployment rate,” he said. “This steadiness in the labour market has also been a factor in the RBA’s decision-making process to keep the cash rate on hold now for the past 12 months.”

Rynne said with inflation declining, and the Australian labour market expected to weaken in the near term, the RBA would probably cut the cash rate from early next year.

But NAB economists, who in September said they believed the RBA would start cutting rates in February, on Thursday revealed the resilience of the jobs market now meant the bank was unlikely to loosen monetary policy until May.

“The labour market has been stronger than expected and the RBA remains concerned about upside risks to inflation should gradual labour market cooling stall and capacity growth remain sluggish,” they said.

“There is a real risk that policy rates stay on hold even deeper into 2025.”

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