by “Their revenues and capital strength surpasses that of most nation-states.”
“They are working overtly, and also stealthily, to re-norm the global regulatory order by shifting the emphasis from citizens to consumers, for explicit commercial interest.”
Mr Pezzullo said this action by big tech was “veiled” by an implied, although at times explicit, “ideology of libertarian communalism” which did not achieve either the liberty of the individual, or any meaningful sense of the community.”
One key area receiving attention is the efforts of big tech to create alternative currencies. Reserve Bank of Australia governor Philip Lowe has been keeping a close eye on how Facebook cryptocurrency Libra (rebranded as Diem in November) would be regulated.
Dr Lowe said earlier this month that the Swiss regulator FINMA has indicated that Diem would likely be subject to bank-like regulatory requirements. “It remains to be seen how this and other similar initiatives progress,” Dr Lowe said.
Mr Pezzullo told AFR Weekend that there were both opportunities and challenges for sovereign states from cryptocurrencies.
“While financial technologies provide financial inclusion and access to markets, they also pose risks including exploitation for criminal purposes,” Mr Pezzullo said.
“Coupled with end-to-end encryption, they can conceal illicit and nefarious actors from the scrutiny of law enforcement. Cryptocurrencies appeal to terrorists, for example, who use online platforms and anonymising technologies to recruit, radicalise, fund raise and plan attacks.”
“In a rapidly evolving environment, sovereign states must tailor their regulatory arrangements to balance financial innovations while mitigating potential risks to individuals and financial stability.”
Home Affairs Minister Peter Dutton has also raised concern at a No Money for Terror ministerial conference saying: “As technologies develop and virtual assets proliferate, there will be a growing appeal to use online transactions and cryptocurrencies for financing terrorism. This is a risk we must stay ahead of. ”
Major fixed income investors such as Pendal’s Vimal Gor have started investing in cryptocurrency with expectations of significant growth.
“Can we honestly sit here and say that in 10 years time there won’t be more digitisation and cryptocurrencies? I don’t think so,” Mr Gor said.
“We don’t think the fiat currency system will collapse. The system will just evolve.”
