Afterpay has told members of the Australian Senate that using crypto could cut payments costs for merchants, and revealed it has hopes for an AUD-backed stablecoin once regulatory clarity is established.

The Buy Now Pay Later (BNPL) firm, recently acquired by Jack Dorsey’s Square, outlined its crypto-related thoughts in a submission to the “Senate Select Committee, Australia as a Technology and Financial Centre”. 

Representatives from the firm were then invited to speak at the official Senate inquiry on September 8, hosted by the crypto-positive Liberal Senator Andrew Bragg.

A keen onlooker from Australia’s blockchain scene, Genesis Block Advisory’s Chloe White, was documenting proceedings as they occurred via Twitter posts…

In its pre-inquiry submission, Afterpay posited that the use of blockchain-based transactions could cut the fees that traditional payment methods incur, stating:

“Merchants stand to benefit considerably from the cryptocurrency model, as card network fees are entirely removed from the equation and the customer/payer bears the transaction costs.”

At the inquiry, Afterpay’s vice president for public policy and communications Damian Kassabgi backed this up, saying, “this idea of being able to exchange currencies from person to person or to a merchant without going through the traditional rails could create a lot of efficiencies.”

Senator Bragg then asked if the BNPL firm had any plans to offer crypto services, and Lee Hatton, Afterpay’s executive vice president, fielded that one:

“Once we’re able to understand the regulatory framework in this space, we can absolutely see where our customers are going,” she said. “And it would seem to us that they are going to want to participate in this way.

“We will absolutely see a part of our customers starting to leverage [crypto] and we would absolutely be looking for a way to support them to do that,” Hatton added.

An AUD-backed stablecoin?

On the matter of stablecoins, in its pre-inquiry submission, Afterpay encouraged the Australian government to work with the crypto sector to consider what “framework an optimal environment for an AUD-backed stablecoin should look like”.

The submission continued: “This includes considering if regulatory instruments are required for stablecoin issuers to have transparent and adequate prudential reserve holdings, consumer-focused data protections and fair and appealable processes in place regarding account blacklisting.”

At the hearing, Kassabgi outlined his vision of a crypto landscape that includes an AUD-backed stablecoin:

“It is not hard to imagine a world [with] a privately issued stablecoin that is pegged to the Australian dollar,” he said. “One that passes from consumer-to-consumer or consumer-to-merchant with very little friction, where the traditional payment rails are not used, where interchange fees are close to non-existent, and where there is no commercial bank as an intermediary.

“There are many benefits to this future outlook. However, there is work to be done to create a safe and efficient regulatory environment,” Kassabgi added.

Crypto’s regulatory landscape in Australia is still very much a work in progress, and further clarity is something that industry figures, such as Chloe White and Blockchain Australia CEO Steve Vallas, have been recently calling for.

With its regular in-depth inquiries, the Senate committee has, however, shown it is clearly keen to engage on the topic in a positive and constructive way.

Bragg, for instance, urged the government in May to tackle the topic of crypto regulations, with the importance of keeping both consumer protection and the fostering of innovation in mind.