Bitcoin and foreign affairs bring digital to financing

The Department of Foreign Affairs and Trade doesn’t have a specific policy on cryptocurrencies like Bitcoin yet, but is watching the emerging potential for the technology to support international development. As a federal inquiry continues, politicians want to hear more of the public sector’s possible uses.

Ask about digital currencies like Bitcoin in policy circles and discussion will soon turn to either crime, terrorism and money laundering, or tax and financial regulations. But foreign aid and development might soon be added to that list, following the appearance of Department of Foreign Affairs and Trade senior executive Rebecca Bryant before a Senate inquiry into the new technology last Tuesday.

Where once microfinance was king, now discussion has turned to uses for cryptocurrency.

The “blockchain” technology that underpins digital currencies, or cryptocurrencies, could play a role in aid and development as a way to increase financial inclusion, particularly by slashing the cost of international remittance. While DFAT does not yet have a foreign affairs-specific policy angle on digital currencies, it is trying to keep up.

According to Bryant, DFAT’s assistant secretary for economic engagement, there is a hole in the international aid and development space to be filled by remittance services underpinned by digital currencies. The cost of remittance is usually very high — in the case of sending money from Sydney to Samoa, it averages 12% of the transaction cost.

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