?An enormous opportunity?: Coalition to consult on a central bank digital currency

Consumers using cryptocurrency exchanges and buy now, pay later services could be protected under what the federal treasurer, Josh Frydenberg, says would be the largest reform to Australia's payments system in 25 years.

Frydenberg, in a speech on Wednesday, will promise a "comprehensive payments and crypto-asset reform plan" to boost innovation and consumer uptake of digital technologies.

Throughout 2022, the federal government will consult on potential reforms including a central bank digital currency, a licencing framework for digital currency exchanges, and fixing the problem of fintech de-banking (where banks refuse to offer services to certain individuals or businesses).

The package aims to give the federal government more oversight including enhanced powers for the treasurer to set rules for payments systems. The Coalition claims this would result in better fees, transparency and competition in the buy now, pay later market.

The crypto reform proposal promises consumers would be allowed to buy and sell assets in a regulated environment, with new rules for businesses that hold crypto assets on behalf of consumers.

Investment in cryptocurrency is becoming more mainstream in Australia, with the Commonwealth bank announcing in November it would allow customers to buy and sell cryptocurrencies on its platforms.

But the sector is still poorly regulated. On Tuesday, myCryptoWallet, one of the country's highest-profile cryptocurrency trading platforms, reportedly collapsed.