While the rest of Asia Pacific is busy trying to regulate cryptocurrencies the best way that they know how, Australia is already on the road to coming up with new use cases even though volatility is still a concern.
CryptoSend, a startup created by two students from the University of Technology in Sydney, has teamed up with global payments and card issuing company VISA. They intend to launch a physical debit card that’ll let users spend their earned cryptocurrency in nearby shops, bars, and more.
Instead of converting cryptocurrency to fiat before every spend, the card will directly enable real-time settlement, enabling a direct purchase experience for the user.
We have customers that range from 18-year-old students to 70-year-old grandmothers… [This] further emphasises the growing appetite for people of all ages to use crypto as an everyday currency.
Australians have not been immune to the hype around cryptocurrencies during the pandemic. According to a report by the investor education app Finder, cited by The Australian, every one in six Australian owns some sort of cryptocurrency as of June.
Cryptocurrencies have been legal in Australia since 2017 and are also subject to taxation. However, as a result of recent developments, the government has floated a new proposal looking for feedback on setting up good market practices of financial instruments, which expose investors to cryptocurrency-backed assets.
Even so, unlike its Asia Pacific peers like China and India, the country’s central bank has no plans to release a central bank digital currency (CBDC) for retail customers.
Partnering with VISA is a game-changer
Payments processing company Novatti, listed on the Australian Securities Exchange, shall issue the card, and New York-licensed custodian BitGo shall take care of the crypto holdings. The supported cryptocurrencies on CryptoSend’s debit card include Bitcoin, Ether, XRP, Bitcoin Cash and Litecoin.
The bigger accomplishment for the startup, however, is VISA’s participation. In addition to the vast number of potential users it brings to the table, the payments company has stringent security protocols and anti-money laundering requirements.
VISA’s approval of CryptoSend indirectly hints that the system can be trusted, unlike the plethora of scams and alleged startups that try to disrupt an already disrupted industry. Although it’s worth noting that VISA has previously issued such cards for crypto exchanges like Binance but they’re not available in Australia.
“The merchants don’t have to change anything. It will be the same as any other VISA transaction to them. But on the backend, the crypto assets are instantly converted into fiat,” Cuy Sheffield, head of cryptocurrency at VISA, told Business Insider in an interaction earlier this month. The company also revealed that over $1 billion had been spent on crypto-linked VISA cards in the first half of 2021.
Why are crypto debit cards a big deal?
Debit cards have revolutionised the payments industry and, despite being decades old, are a critical part of the global banking infrastructure. The card is a crucial method of cash replacement, further enabling digital transactions smoothly. However, they are usually dependent on a fiat currency like the dollar.
CryptoSend aims to change that foundational block by allowing users to access cryptocurrencies using debit cards. Not only is that convenient for enthusiasts, but it’s also a way to have a familiar way to conduct transactions for those who are new to the space.
Coinbase has a similar system in place, where users can link debit cards issued by the company to make retail transactions by linking the card to Apple Pay or Google Pay. But, Coinbase’s 56 million users pale in comparison to Visa’s reach of billions.
Australia has been ahead of the curve when it comes to regulating cryptocurrencies
While other countries are still mulling over how to regulate the crypto market, Australia declared crypto exchanges are legal and covered by Anti-Money Laundering and Counter-Terrorism Financing Act, 2006 nearly half a decade ago. Since 2017, exchanges have had to register with the Australian Transaction Reports and Analysis Centre (AUSTRAC) in order to operate locally.
A cryptocurrency asset is treated like a fixed asset — akin to a house — in the country and hence, capital gain taxes are applicable.
A few weeks ago, Australia’s securities regulator said it would consult stakeholders on proposals to identify appropriate crypto assets and set up good market practices for financial instruments. Considering these assets as a new financial instrument could help the country adopt blockchain as a technology for self-growth.
The authorities are considering opening up their financial sandbox to include cryptocurrencies and other blockchain-based projects. According to an October 2018 report by Deloitte, “The benefits of going through the Financial Conduct Authority (FCA) sandbox vary.” It states that participation in the sandbox breaks the myth of regulation being a barrier to innovation.
“On the contrary, it has shown that regulators can play an active and positive role in encouraging innovation by giving unique business models ‘permission to play’ in a highly competitive financial services sector,” the report explains.
The Australian regulator will issue a feedback report and publish information on good practices following consultation. The idea of a Bitcoin-based card is just picking up, and VISA is certain about the future despite the nascent nature of the industry.
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