Crypto reforms ‘must be fast-tracked’, Andrew Bragg says

Another ‘MyCryptoWallet’ collapse is inevitable unless new laws to protect consumers are passed, this government senator says.

Senator Andrew Bragg in his office at Parliament House in Canberra. Picture: NCA NewsWire / Gary Ramage

New regulations to rein in the crypto ‘Wild West’ should be expedited to help avoid further collapses, according to Andrew Bragg, the government senator in charge of delivering the federal government’s crypto reforms.

The multimillion-dollar losses incurred by consumers due to the recent failures of Australian companies MyCryptoWallet and Blockchain Global should be cause for alarm, Mr Bragg will tell the APAC Blockchain conference in a speech on Wednesday.

“This is a sector that will employ hard working Australians, put food on the table, and create huge opportunities for our economy. Sadly, we have already seen some failures in recent times: the collapse of MyCryptoWallet which resulted in significant consumer losses, and we’ve also seen companies like MHC Digital Code moving abroad as they chase more crypto-friendly settings,” Mr Bragg will tell the conference.

“Both are big blows. Both examples of why we need regulation. If we do not act, and act fast, it is only a matter of time until these events are repeated.

“The reality is that crypto is unregulated in Australia.”

As The Australian first reported, liquidators are currently seeking expressions of interest for MyCryptoWallet‘s assets. The failed Melbourne-based company that was once one of Australia’s highest-profile cryptocurrency trading platforms, claiming nearly 20,000 users globally.

The company collapsed in December, leaving customers unable to access their accounts, some of whom have told The Australian they are owed as much as $50,000.

Mr Bragg’s proposed changes, announced by Treasurer Josh Frydenberg in December, would help protect consumers who trade on cryptocurrency exchanges through a new custody regimen, and would test market licensees for capital adequacy, responsible persons and product disclosure requirements. Statistics show more than 3 million Australians now own a crypto asset.

The government will also pilot a central bank digital currency.

“We have committed to delivering the crypto markets system by the end of the year, I think we ought to be aiming for mid-year, such is the industry consensus and consumer protection needs,” Mr Bragg will say on Wednesday.

Statistics show more than 3 million Australians now own a crypto asset. (Photo by Ozan KOSE / AFP)

“If we get this right, we’ll find Aussie crypto exposure running through businesses domiciled in New South Wales, not New York.”

ASIC Chair Joe Longo said in November, “the policy and regulatory challenges are very significant... There are some difficult policy questions to be answered. They have to be answered, frankly, by the government.”

It comes as Telstra chief executive Andrew Penn also called for urgent crypto regulation, speaking overnight at a speech at Mobile World Congress in Barcelona.

Speaking in his capacity as Chair of the Australian Federal Government’s Industry Advisory Committee on Cyber Security, Mr Penn said ordinary Australians are using decentralised currencies to pay for legitimate goods and services and need a system that protects them to do this.

“The rise of ‘hot wallet swapping’ that sees hard-earned cryptocurrency swiped out from underneath unsuspecting users is one we are taking a keen interest in. As is the practice of crypto rug pulling where a whole currency is suddenly closed and the value evaporates,” he said.

“As part of the IAC’s latest report, we are recommending more secure settings for Australia’s decentralised financial future, both at a cryptocurrency exchange and at a customer security level.

“Protecting and educating consumers is good, but it only does part of the job: we still need to ensure those trading and spending cryptocurrency in Australia are protected by legislation and secure market settings.”