The Financial Planning Association of Australia (FPA) is showing its support for a “crypto rule book”, calling to regulate crypto assets via exchanges and arguing it would be far too difficult to regulate the underlying assets separately.
Regulate Exchanges, Not the Technology
Ben Marshan, the FPA’s head of policy, strategy and innovation, has said that “the regulation of a financial product or service should not depend on the technology which underlies the asset”, adding:
To this point, investment in crypto assets is as much in relation to the asset itself, such as an ether [ETH] coin or a non-fungible token [NFT], as a bet on the sustainability of the technology platform supporting the asset, for example, the Ethereum blockchain.Ben Marshan, head of policy, strategy and innovation, FPA
Marshan’s opinion is that besides regulating exchanges, it would be nearly impossible to regulate assets given the way they are housed: “[The products are] so decentralised, they’re in all sorts of foreign jurisdictions.”
He noted further that the regulation of crypto should fall under the current financial services regime and not under a new separate legal framework. Focusing regulation on crypto service providers, such as exchanges, would remove a lot of “complexity” from the equation:
It makes it a lot easier because instead of having to work your way through thousands of pages of the Corporations Act, people can go to a specific section and it’s much more efficient.Ben Marshan, head of policy, strategy and innovation, FPA
Marshan’s view is that if a rule book were adopted, it would allow financial planners to recommend crypto assets to their clients along with specific training in associated crypto strategies.
“At the moment, it’s effectively illegal because there’s no authorisation around crypto assets,” Marshan said, “and because of that financial planners can’t recommend them and can’t get professional indemnity insurance.”
Calls to Government for Clearer Regulation
While the FPA is pledging its support for a “crypto rule book” to be implemented, many have called on Australia’s new Labor government for clearer regulation when it comes to crypto. In 2021, Aussies lost a total of A$84 million in cryptocurrency scams, which many argue could have been avoided if the previous government had enacted clearer regulations regarding digital assets.
The new government is unlikely to change its stance, having recently confirmed that crypto is not a foreign currency and would remain subject to capital gains tax.
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