- An Australian regulator has likened Bitcoin to cigarettes used as prison currency
- The Australian Securities and Investments Commission’s Digital Assets Lead, Rhys Bollen, made the comparison during a discussion about regulatory frameworks for digital assets
- The analogy emerged while addressing concerns about the application of Non-Cash Payment Facility (NCP) legislation to digital assets like Bitcoin and stablecoins
In a recent liaison meeting, the Australian Securities and Investments Commission’s (ASIC) Digital Assets Lead, Rhys Bollen, sparked controversy by comparing Bitcoin to prison cigarettes. The provocative analogy has ignited debate in Australia’s cryptocurrency sector, coming a week after JPMorgan CEO Jamie Dimon used the same comparison in a different context. This remark came during discussions on applying Non-Cash Payment Facility (NCP) legislation to digital assets, leaving industry stakeholders questioning the scope and intent of the proposed guidance.
“Prison Cigarettes”
During the meeting, Bollen was questioned about how digital assets, particularly stablecoins, might be regulated under NCP legislation, which governs non-cash payment methods like digital wallets and cryptocurrencies:
In theory, almost anything could potentially be used to make a payment to another person. You know, cigarettes are used in prisons as a way of making payments… If the product is promoted as having this as one of its primary uses, and you see that in the marketing … that’s where we’re getting closer to financial product territory. I don’t really have a bright line test for you.
This theory massively oversimplifies the complexities of digital currencies while equating Bitcoin or stablecoins with cigarettes ignores the transformative potential of blockchain technology in global finance. Bollen’s remarks have sparked fears that ASIC’s guidance could stifle innovation and create uncertainty for businesses operating in the space, although there is no sign yet of such a clampdown.
The application of NCP regulations to cryptocurrencies in Australia would present a double-edged sword. While it could bring legitimacy and protection to the sector, it also risks stifling innovation and creating market uncertainty if implemented without clear, precise guidelines.
Parallels with Jamie Dimon
Bollen’s remarks echo similar sentiments expressed by JPMorgan Chase CEO Jamie Dimon earlier this month, although in a different context. Dimon, a long-time Bitcoin critic, told the Australian Financial Review business summit, “I don’t know what Bitcoin itself is for, but I defend your right to buy it, much like a cigarette.” He further criticized the cryptocurrency’s association with illegal activities like fraud and trafficking, notions which are fast becoming outdated
Given that Dimon was speaking to the Australian Financial Review and the country’s Digital Asset head used the cigarette comparison a week later, we can assume this is where Boller picked up the analogy.
