Australian Senator Andrew Bragg plans to introduce legislation to monitor Chinese banks operating in the country and their future use of Beijing’s central bank digital currency (CBDC), known as the e-CNY, saying the adoption of the currency could be a threat to national security.
Speaking on ABC radio on Monday, Bragg – one of Australia’s leading cryptocurrency advocates – said he intends to introduce the Digital Assets (Market Regulation) Bill when parliament next sits at the end of this month.
“That [e-CNY] currency, if it became widespread in the Pacific, or even within Australia, would give the Chinese state enormous power – economic and strategic power that it doesn’t have today,” Bragg said. “So, I think we need to be prepared for that. We need to know more about this digital currency, so the bill establishes reporting requirements in that regard.”
While China remains Australia’s largest trading partner, relations between the two countries have deteriorated, especially since Canberra called for an independent probe into the origins of Covid-19 and Beijing responded with a raft of bans and sanctions on Australian exports. Former Prime Minister Scott Morrison said China is a threat to peace in the region.
As the name implies, a CBDC is a digital currency issued by a central bank. China’s e-CNY has been in trials since 2014 and is regarded as the most advanced among other leading economies testing the concept.
The Reserve Bank of Australia last month announced that it was launching a research project to explore possible use cases for CBDC technology in the country.
Bragg is also seeking to address stablecoins – or cryptocurrency pegged to another asset, such as the U.S. dollar – in the same legislation by making it an offense to issue one without a license.
Australia already has a few such tokens, including the Australian Dollar token, or AUDT, as well as another operated by the Australia and New Zealand Banking Group Ltd, the A$DC.
Stablecoins are coming under increased international scrutiny, Bragg said, following the multi-billion-dollar collapse of the Terra/Luna stablecoin project earlier this year, which deepened a price decline across most cryptocurrencies and drove some companies in the industry into bankruptcy.
Last year, Bragg chaired a Senate committee that released one of the country’s most detailed reports into cryptocurrency and blockchain technology, which included 12 recommendations for the Australian government to follow to best approach crypto regulation.
However, Bragg’s conservative Liberal Party lost the federal election in May and the new Labor Party government has so far adopted only a few of those recommendations. One is known as “token mapping” to better understand each cryptocurrency’s use case and how they should be regulated.