A Senate committee has reported on the regulation of cryptocurrencies in Australia. The Select Committee on Australia as a Technology and Financial Centre’s final report covers the regulation of cryptocurrencies and digital assets, as well as a number of related issues. It suggests establishing a financial markets licensing regime for digital currency exchange providers (DCEs) and implementing rules for custody of digital assets. The idea is to enable DCEs to demonstrate a high level of commitment to consumer protection and operational integrity, without imposing obligations that are so onerous as to drive local operators out of the market.
The context is set out in the executive summary – “The scale and speed with which cryptocurrencies and other digital assets have progressed in recent years has surprised governments, regulators and policy makers. With a global market now totalling in the trillions of dollars, the tremendous potential of blockchain technology and decentralised finance is becoming recognised by mainstream institutions and investors. Recent survey data shows that 25 per cent of Australians either currently or have previously held cryptocurrencies, making Australia one of the biggest adopters of cryptocurrencies on a per capita basis.”
Hence, it’s considered that developing a custodial industry for digital assets may lead to significant economic opportunities if Australia can become a leading jurisdiction. “Australia has significant potential to keep advancing as a technology and financial centre, if we grasp the opportunity to update our regulatory frameworks, drive innovation and enhance our competitiveness”.
The bottom line is that by offering a regulated environment, holders of cryptocurrencies may be attracted to Australia. I can see the logic in this for “manstream” holders of such “currencies”, but of course there are some users of cryptocurrencies for whom anonymity is the whole point. It’s hard to see these users taking advantage of an exchange regulated as is proposed, even with the added security that it would offer!
The committee made quite a number of other recommendations as well, including in relation to taxation treatment of cryptocurrencies and about the “de-banking” of some people.
Musings and Mutterings 