Crypto sector hopeful amid plans for digital assets laws, interventions

The digital assets sector is keen to see the next steps from the Albanese government to regulate the growing crypto sector.

(FA woman speaks with a worker at a cryptocurrency exchange in Hong Kong on April 15, 2024. (Photo by DALE DE LA REY / AFP)

Members of the crypto industry have backed the Albanese government’s latest interventions into the growing digital assets market as “pragmatic”, noting the approach outlined on Friday kept Australia in line with other countries.

Announcing its planned approach for digital assets, the Albanese government revealed a four-pillared approach to digital assets, alongside new tax rules for crypto products.

The plans would see digital assets companies held to the same governance standards as other financial services companies, as well as subjecting them to licensing rules that would require them to act fairly and efficiently.

MHC Digital global markets and corporate finance head Edward Carroll said the firm was “very supportive” of the guidance outlined by the federal government, noting the key to reforms were a licensing regime for services providers, custody laws, and regulation of stablecoins.

Stablecoins, such as USDT, would be subjected to minimum capital standards overseen by the prudential regulator.

“More broadly, this indicates bipartisan support for developing a regulatory framework for digital assets leading into the election, which we see as overwhelmingly positive for the sector in Australia going forward,” Mr Carroll said.

“It has been our long-held view that stablecoins would likely be considered a stored value facility, and minimum capital requirements make sense for an industry that handles large volumes of client capital.”

The government added that it would look to introduce laws governing the sector this year.

In the interim, the Australian Securities & Investments Commission has moved to demand crypto companies register for financial services licences.

ASIC chair Joe Longo is a crypto sceptic, recently warning of the dangers of cryptocurrencies such as bitcoin.

ASIC Chair, Joe Longo speaks at the ASIC Annual Conference at the Hilton hotel. John Feder/The Australian.

Crypto industry peak body Digital Economy Council of Australia said the latest proposals were “a very timely and important signal to both industry and investors that Australia is serious about supporting innovation with clear direction and purpose”.

DECA chief Amy-Rose Goodey said the industry was ready to engage and contribute. “If we get this right, we keep talent in Australia, attract investment and unlock real opportunities for the Australian economy,” she said.

BTC Markets boss Caroline Bowler said the government’s proposals were “pragmatic” and “grounded”. “We appreciate that the suggested standards to be imposed on digital asset providers are common sense, and do not require a reworking of existing regulations,” she said.

“The carve-out of non-financial products and software development should be of relief for those who create and use NFTs – an area where Australia has shown ingenuity and bleeding edge creativity.”

The federal government also outlined plans to push financial institutions and regulators on “de-banking”, where banks dump crypto operators amid concerns over potential financial crime.

Kraken Australia managing director Jonathan Miller said debanking was a major issue for the sector. “It’s great to see recognition of the urgent need for bespoke crypto legislation to address the existing confusion and uncertainty facing Australian crypto investors and businesses,” he said.