The use of bitcoin and other digital currencies as a payment method is relatively limited in Australia and do not raise any pressing regulatory concerns at the moment, the Reserve Bank of Australia (RBA) officials said recently.

In their opening statement before the Australian House of Representatives Standing Committee on Tax and Revenue, Tony Richards and David Emery from the RBA’s Payments Policy Department noted the recent rise in the price of bitcoin and other cryptocurrencies. However, they also emphasized on the potential of cryptocurrencies to be used for illicit activities.

“[T]heir [cryptocurrencies’] use may have some implications for tax authorities and they raise more significant issues for authorities tasked with crime prevention and detection. The distributed and cross-border nature of digital currencies like bitcoin means that regulation of the core protocols of these systems is unlikely to be effective,” they said. “Authorities have therefore tended to focus on the ‘on-ramps’ and ‘off-ramps’ – that is the links to the traditional payments system.”

The RBA, however, remains optimistic about the underlying blockchain and distributed ledger technologies. Richards and Emery said:

“The greatest potential is likely to be in sectors where workflows involve lots of different parties with no trusted central entity, and where current practices are quite inefficient. Some frequently suggested financial sector use cases include correspondent banking and remittances, as well as trade financing.”

The RBA has been closely monitoring the blockchain space for quite some time. In April, the central bank established an internal working group to explore the technology.

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