Australian Crypto Bill Gets Rejected, As Legislation Proceeds Slowly

A bill with the title ‘The Digital Assets (Market Regulation) Bill 2023’, known also as the ‘Bragg Bill’ was rejected by Australia’s Senate Economics Legislation Committee on Monday. Coalition Senator Andrew Bragg, who introduced the private bill, called the rejection a setback and said it had “put regulating crypto in the slow lane”.

Bragg questioned the government’s interest in regulating the digital asset space, highlighting the delays it would face now, with no draft legislation in the foreseeable future. Since Australia does not have specific rules and regulations around crypto, the bill aimed to introduce measures around licensing for exchanges, capital requirements, and disclosure obligations. 

Committee Cites Lack of Detail

The rejection by the Labor majority committee was based on a lack of detail, deviation from government policy, and misalignment with international approaches, according to a statement. The committee recommended to “continue to consult with industry on the development of fit-for-purpose digital assets regulation in Australia.”

While Australia continues to make slow progress toward regulation, it is currently lagging behind other advanced economies. For instance, Europe is in the final stages of implementing its Markets in Digital Assets (MiCA) regulation, and Singapore released a stablecoin regulatory framework in August of this year. Meanwhile, the United Kingdom and the United States are also working on stablecoin regulations. However, the U.S. is still navigating a legal minefield with no clear consensus, and the U.S. Securities and Exchange Commission has classified most crypto assets as securities.

Although Other Countries Are Further Ahead, There is Progress

Unlike the US, Australia has tried to regulate crypto through parliament instead of the courts, but not fast enough for some, as Bragg noted, “It’s critical we get this done now because businesses aren’t just going to wait around.”

While Bragg considers the government’s approach to be slow, the industry has largely welcomed the recent token mapping initiative. According to the Treasury “Token mapping seeks to build a shared understanding of crypto assets in the Australian financial services regulatory context. This will explore how existing regulation applies to the crypto sector and inform future policy choices.”

The ‘Australia as a Technology and Financial Centre’ report recommended establishing a framework to better understand digital assets and bring ‘Australia in line with leading digital-asset jurisdictions’.

Calls for Regulation Increasing

While Australia generally maintains a favourable view of cryptocurrencies, there have been calls for increased regulations in response to recent scams, including the FTX debacle. According to a Swyftx survey, one-quarter of Australians hold cryptocurrencies, with 26% indicating their plans to buy crypto in the next 12 months. Meanwhile, the ACCC estimates that $221 million was lost to crypto scams in 2022. Consequently, some banks have started imposing limits on transfers to exchanges, with NAB and CommBank banning payments to certain crypto exchanges they deem high-risk.

In an initial industry response, Michael Bacina, the chair of Blockchain Australia and Partner at Piper Alderman, stated in a blog post that Australia should learn from other countries but is at risk of missing out by “not moving faster to follow the rest of the world into bringing a fit-for-purpose regulatory regime for crypto-assets into existence.”