Crypto ‘a top priority’ for government ahead of election
Digital Economy Minister Jane Hume says investors will be able to trust an ‘Australian-made badge of approval’ when dealing with crypto exchanges, under government plans.
Australia can seize on an opportunity to leap ahead of global competition in the heady world of crypto, industry leaders say, after the Morrison government released terms of a review into digital assets and declared they’ll be a “top priority’’ ahead of the May election.
Treasurer Josh Frydenberg on Monday released a new consultation paper on the cryptocurrency industry, seeking feedback on digital asset regulation, including input on a licensing and custody regimen, and the classification of digital tokens, to provide more certainty to crypto providers, consumers and regulators.
More than 800,000 Australian taxpayers have used some form of cryptocurrency in the past three years, up 63 per cent in the last year alone, while some Australians have lost tens of thousands of dollars worth of crypto with the collapse of local unlicensed exchanges.
Speaking on Monday at the Blockchain Week conference in Sydney, the government’s Minister for the Digital Economy Jane Hume assured industry that crypto regulation will be a ‘‘top priority in the Coalition’s next term of government’’.
Senator Hume flagged the government would ensure crypto businesses would receive verification in the form of an “Australian-made badge of approval” to give certainty to consumers.
“Crypto values will go up and down sure as eggs and the government will not be protecting consumers from market volatility, and nor should they,” she said.
“But Australian investors will be sure that if they use a licenced Australian exchange that they can trust that exchange will deliver on its commitments to customers and have appropriate protections.”
Liberal senator Andrew Bragg, who has led the government’s crypto regulation efforts, told the conference that “we don’t live in a libertarian nirvana” and that Australia has an opportunity to become a true blockchain and cryptocurrency hub globally.
“This is a huge down payment from the Treasurer on Australia’s digital future,“ Senator Bragg said.
“Australia is now a world leader in cryptocurrency and we are breaking new ground.”
In laying out his agenda for the sector, Senator Bragg said that alongside the consultation on custody regimes, the Council of Financial Regulators would this year examine de-banking, while the Board of Taxation would inquire into the taxation of crypto assets.
He said that rather than changing the Corporations Act, a clean new “Digital Services Act’’ was needed, particularly to properly deal with Digital Autonomous Organisations – or DAOs – which some think could potentially replace traditional corporate structures in the future.
A tax cut may also be needed for crypto assets to encourage growth for the sector, Senator Bragg said.
“Unless you are competitive on taxation, you cannot be a serious hub.”
In its paper, Treasury said it would establish a new licensing regime including minimum standards of conduct and regulation that is “fit for purpose, technology neutral and risk-focused”.
Industry players said that they’ve been calling for more regulation in recent months, particularly amid the failure of multiple local crypto exchanges, including ACX.io and myCryptoWallet, which were unregulated.
“We have been in active consultation with the federal government and agencies throughout this process and are very pleased to hear of a market licensing and custody requirement for Australia,” BTC Markets chief executive Caroline Bowler said.
“This commitment pushes Australia into a leading position within a global regulatory environment and levels the playing field internationally. It also creates parity with traditional finance, in terms of regulatory and technology requirements.
“Furthermore, it presents an opportunity to showcase the tech benefits of blockchain technology as a trading solution versus traditional banking,’’ Ms Bowler said.
“The global and 24/7 nature of digital assets means, that with licensing, Australia can play a leading role.”
The founder of financial comparison website and crypto provider Finder, Fred Schebesta, said crypto regulation needed priority, now and post election, to bring a competitive edge with the international market, and to ensure money flows and talent stays local.
“We believe that smart regulation will legitimise a sector that is too big to ignore. For a strong Australian economy post-pandemic, we need the crypto sector to have the right conditions to thrive. This requires striking a balance between protecting consumers and allowing stronger investment into crypto innovation.”
The local managing director of global exchange Kraken, Jonathon Miller, cautioned against overregulation in the space.
“An onerous market licensing and/or crypto asset custody regimen could risk driving these businesses offshore. As an exchange committed to regulatory compliance operating in nearly 190 jurisdictions, we look forward to being involved in this consultation process.”
Submissions to Treasury’s inquiry into crypto providers close on May 27.
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