The Albanian government wants to map out Australia’s cryptocurrency landscape and is taking a slower approach to digital asset regulation and reform than the former Morrison government.
In a joint announcement Monday by federal treasurer Jim ChalmersAssistant Treasurer Stephen Jones and Competition, Charities and Assistant Secretary of the Treasury Dr. Andrew Leigh, said “the first step in a reform agenda” for crypto will see Treasury prioritize token mapping work for the remainder of this year to help identify how to regulate cryptocurrency assets and related services.
The aim is to identify notable gaps in the regulatory framework, advance work on a licensing framework, review innovative organizational structures, review retention obligations for third-party crypto-asset custodians and provide additional consumer safeguards, the ministers said.
“This has not been done anywhere else in the world, so it will make Australia leaders in this work,” they said
“With the increasingly widespread proliferation of crypto assets – to the extent that crypto advertisements are seen everywhere at major sporting events – we need to ensure that clients dealing with crypto are adequately informed and protected.”
A public consultation paper on token mapping will be released shortly.
Chalmers accused the former government of “ploddling” in the regulation of crypto assets and prematurely “jumping straight into options without first understanding what was being regulated”.
Labor’s announcement comes 10 months after a report in the regulation of digital assets was pronounced by a senate committee looking into space. Chaired by Liberal Senator Andrew Bragg, it examined issues such as regulation and consumer protection, the fintech terror of “debanking” and the taxation of digital assets.
The report made 12 recommendations that Senator Bragg said will drive opportunities for innovative businesses, protect consumers and improve Australia’s competitiveness, while also providing a clear regulatory framework for Australia’s digital asset sector.
Former treasurer Josh Frydenberg embraced the report last December, announcing: plans to modernize the rules around digital wallets and BNPLs, as well as improving oversight and licensing around companies that buy, sell or hold digital assets, in what he called the “key reforms to our payment system in 25 years”
He outlined a timeline that would have led to discussions on establishing a licensing framework for digital currency exchanges, as well as a custody or custody regime for companies holding crypto assets, now complete, but that has been pushed aside as government shifts focus. on token assignment.
The new treasurer and government say they are now “ready to begin consultations” with stakeholders on a framework for industry and regulators that will allow consumers to participate in the market and also better protect them.
“The goal is to identify notable gaps in the regulatory framework, move forward with a licensing framework, review innovative organizational structures, review retention obligations for third-party custodians of crypto assets, and provide additional consumer safeguards,” Chalmers said.
Recent analysis by Roy Morgan found that more than 1.07 million Australians – 5% of the adult population – now own at least one cryptocurrency, and under the age of 35 the majority of those investors (59%) – more than one in the ten under 35 years of age. More than two-thirds (69%, 742,000) of crypto investors are men.
Reaction to the government’s announcement was mixed.
Senator Bragg said the Labor government is “trying to give the impression that it is doing something when it is not”.
“In the Senate report, I recommended regulating crypto through a market licensing system and token mapping. No choice is required. You can do both,” he says.
“Australia is in the midst of a race for consumer protection, capital attraction and innovation. The Albanian government is ordering a new assessment instead of responding to the Treasury consultation on crypto markets and custody. The government should continue to draft a draft bill rather than further review. Our competitors are improving their regulatory systems while we make endless assessments.”
Caroline Bowler, CEO of crypto exchange BTC Markets said they were delighted by the treasurer’s announcement on token mapping and consumer protection.
“This move recognizes the importance of digital asset infrastructure for Australia’s future, and we look forward to working with the Treasury Department to create a regulatory framework,” she said.
“It also reflects the calls from many of us in the industry who have asked for proportionate, appropriate regulation of our industry. We endorse the position of the Treasury consultation paper of March this year, which recognized that regulation should be risk-oriented and technology neutral.”
bowler said: BTC Markets has provided feedback to both the cross-party Senate committee last year and the Treasury’s recent consultation paper on licensing and custody requirements for the crypto industry.
“The Treasury consultation document of March 2022 talked about regulating according to risk. It acknowledged that crypto assets are different in character compared to traditional financial products,” she said
“The issues of trust and information asymmetry can be mitigated using blockchain technology. As a result, any regulations should be applied on a risk-based approach and considered design neutral. Token mapping is the fundamental work to achieve this risk-based objective reach.”
Bowler said there are additional benefits to token mapping as well.
“It will provide more clarity to crypto investors; helping companies develop their own blockchain-based innovations; provide guidance on digital currency exchanges; and to help regulators shape an appropriate regulatory regime,” she said.
“It will also properly position Australia in a global leadership role in this area.”
dr. Dimitrios Salampasis, director of fintech at Swinburne University of Technology, hoped the token mapping will help regulators decide how to intervene, but the government must continue with the work.
“This is indeed an essential first step to ensure a harmonized understanding of the different uses and behavioral characteristics of existing tokens,” he said.
“However, this token mapping exercise does not really solve the bigger problems surrounding the unregulated world of crypto and the way various quasi-DeFI mechanisms have functioned, with devastating results. Consumer protection is vital and it is very important to keep in mind the various crypto-enabled financial instruments that are constantly being developed.
dr. Salamasis said an important aspect of the exercise should be the consideration of jurisdictional approaches, the retail and wholesale use of different tokens, the integration of digital assets in the metaverse and the ethical and human dilemmas raised.
“This token mapping requires a holistic approach that goes beyond the regulatory and fiscal aspects of crypto that encompasses complex and sensitive aspects, incl. identity, personal data, human rights, etc.,” he said.
“This token mapping needs to be done in conjunction with work taking place in other jurisdictions and international organizations to ensure consistency, regulatory and fiscal interoperability.
“The government should take advantage of the Senate Committee’s recommendations for Australia as a technology and financial center and avoid further delays.”