The Australian crypto industry has been staring down the barrel of a regulator firmly fixed on applying a licensing regime to exchanges which would have wiped out all but the largest exchanges. But in an about-face, likely informed in part by the US and other countries adopting sensible innovation-embracing regulation, the Australian Financial Review and others are reporting that the government will now launch a more streamlined crypto regulation framework.
The key parts of the framework will reportedly include:
Crypto exchanges needing Australian Financial Services Licenses, rather than the far more expensive and burdensome markets licenses.
Minimum capital adequacy requirements for exchanges, something the industry has been calling for as part of regulation.
Regulation of stablecoins as 'stored-value facilities' by the Australian Prudential Regulation Authority.
Investigations into ending debanking.
No changes to existing tax laws, but the creation of a working group to move towards clearer tax rules on crypto.
ASIC is presently consulting on an update to a guidance paper INFO225, with a number of responses to the paper calling on ASIC to get into the real work of fit-for-purpose legislation rather than non-binding guidance when key issues of definitions of law remain unclear. A quick poll showed 36% of industry leaders thought businesses would close amid higher costs and talent would leave without increased consumer protection:
The Australian Treasury has since released its statement titled 'Developing an Innovative Australian Digital Asset Industry'. Some highlights from the statement include:
The Government is working with industry, regulators and the broader community to make Australia a leader in the global digital asset ecosystem.
The four primary elements to Australia's approach to digital asset reforms are: ...a framework for Digital Asset Platforms (DAPs), which are online platforms that hold digital assets, such as crypto, for consumers... ...a framework for payment stablecoins, which will be treated as a type of Stored-Value Facility (SVF) under the Government's Payments Licensing Reforms... ...undertaking a review of Australia's Enhanced Regulatory Sandbox... ...a suite of initiatives to investigate ways to safely unlock the potential benefits of digital asset technology across financial markets and the broader Australian economy.
The Government recognises that de-banking...is a global challenge [for the digital asset sector]
We want to seize [the] opportunities [of digital assets] and encourage innovation at the same time as making sure Australians can use and invest in digital assets safely and securely with appropriate regulation.
It is not known yet what the policy changes will mean for the INFO225 consultation, but it is likely that submissions will inform the development of legislation which ASIC is assisting the government to develop. The government has promised legislation by years end and with an election coming up in Australia, perhaps there is room for a bipartisan approach to finally hop towards licensing clarity for the Lucky Country.
By Michael Bacina, Steven Pettigrove, and Luke Higgins
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