Labor's new financial services minister says cryptocurrency exchange and BNPL regulations are coming

The new federal financial services minister Stephen Jones says the Labor government will regulate cryptocurrency exchanges, as well as applying credit laws to the buy now, pay later (BNPL) sector.

Speaking to the Guardian Australia, Jones vowed to continue the roadmap drawn up by the previous government and former treasurer Josh Frydenberg, consulting with the crypto sector to regulate it like other financial markets to make trading more transparent.

“That all leads to a couple of things. One is proper regulation through market powers of exchanges. It also raises questions about whether and how cryptocurrency as a product is regulated in our financial services system – is it regulated as a financial product?” Jones told the Guardian Australia.

“Or do we have a standalone way of recognising and regulating? These are questions we need to work through.”

While Frydenberg lost his seat in the election, NSW Senator Andrew Bragg, who chaired the senate committee looking into digital assets, drawing up a plan to regulate the sector in a bid to make Australia a major hub for crypto.

Senator Bragg said he’s “never seen an industry so keen for regulation” as the crypto sector.

“Almost everyone I’ve spoken to in this industry understood that regulation would bring credibility and validity to this sector that had been cast aside by many as fanciful and illegitimate for its 12 year lifespan,” he said.

Bragg was hoping to see the changes implemented within 12 months and the comments by the new financial services minister suggest that momentum will be maintained.

Jones also told the Guardian that the government will follow through on its commitment to include the BNPL sector under the scrutiny of credit laws – a move fiercely opposed by the sector, which has been self-regulated until now amid increasing concerns raised by financial counsellors over the impact of BNPL products.

Yesterday Apple announced it will also enter the BNPL space with a new pay-in-4 feature, Apple Pay Later, via Apple Pay as part of the roll out of iOS 16.

Zip shares fell 14% yesterday on the news and BNPL stocks have plummeted across the board in 2022 amid growing concerns of rising bad debts, cost-of-living pressures and moves by existing financial institutions into the space with copycat products.

Fintechs such as Afterpay (now part of Block), Klarna and Zip are exempt from Australia’s consumer credit laws, with the companies arguing that it’s not a credit product

The financial services minister said he thinks they’re “a good innovation” but disagrees with the BNPL sector’s self assessment.

“Can we stop having an argument about whether [they’re] credit or not? It really is a dead-end street,” Jones told the Guardian.

“Let’s start working on regulating [them] within the credit space. We welcome the fact that they’ve introduced a code, [and will] move to legislate it and fill any gaps.”