On Monday, Australian Treasurer Jim Chalmers released a statement announcing that Australia is all set to begin a review of how the country’s regulatory framework manages cryptocurrencies to keep up with the fast-moving world of digital assets and protect consumers at large.
"Australians are experiencing a digital revolution across all sectors of the economy, but regulation is struggling to keep pace and adapt with the crypto asset sector," he said.
Treasurer Chalmers said this was the first time a country had sought to map out the crypto landscape. This initiative, according to him, would give a clear insight to help in deciding possible areas of regulation.
This is a significant move considering Australia is among the top-most cryptocurrency markets globally. Speaking of numbers, according to the tax office estimates, since 2018, over one million people have “interacted” with cryptocurrencies in Australia.
If we go by external surveys, the numbers are even higher. For instance, according to Finder’s recent survey, 2.6 million Australians own cryptocurrencies, which puts the country in the 4th spot in crypto adoption.
Australia’s move towards crypto regulation comes as the Reserve Bank of Australia prepares to trial a digital currency in a “ring-fenced” pilot program as part of a collaborative research project to look into how consumers and businesses can use it.
The first step in this reform agenda is “token mapping.” The Treasury will prioritize this in 2022 to help identify how digital assets and related services should be regulated.
“This hasn’t been done anywhere else in the world, so it will make Australia leaders in this work,” added Chalmers. The government promises to release a public consultation paper on ‘token mapping’ soon.
Simply put, through token mapping, the new government of Australia, led by Prime Minister Anthony Albanese, aims to uncover the characteristics of all digital asset tokens in the country, including the type of crypto asset and its underlying code, as well as any other defining technological feature.
The token mapping exercise will help determine which digital assets are already subject to financial services law. Besides this, it will also enable the government to identify non-financial products that may require their own special legislation.
But before this "token mapping” is completed, the government will release a paper about a regulatory framework after consultation with stakeholders.
According to Chalmers, there has been an “increasingly widespread proliferation of crypto assets,” but regulation is struggling to keep pace and adapt with the crypto asset sector. He added that regulators must ensure that consumers are adequately informed and protected.
“As it stands, the crypto sector is largely unregulated, and we need to do some work to get the balance right so we can embrace new and innovative technologies while safeguarding consumers,” Chalmers said.
The move seems to be more than just to advance technology in the country; however, as Chalmers pointed out, the previous government “prematurely” jumped to crypto asset regulation without first understanding the asset class.
The current government of Albanese, which defeated the previous Labor administration under Scott Morrison in May, is taking a more stern approach to working out the ecosystem and the risks involved, Chalmers added. The idea is to keep up with the developments and provide greater consumer protections, as per the statement.
The reform aims to identify notable gaps in the regulatory and licensing framework, Chalmers said in the statement. He further said they would review innovative organizational structures, look at custody obligations for third-party custodians of digital assets, and provide additional consumer safeguards.
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