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Australian Government Releases Crypto Proposal in Bid to Curb Industry
- The Australian Treasury has revealed a paper proposing changes to crypto regulation.
- The proposal seeks to better protect Australian investors from a FTX style collapse.
- Treasury is seeking feedback from industry and the public by December 1.
On Monday, Treasurer Jim Chalmers revealed plans to regulate cryptocurrencies and exchanges. The proposal follows the collapse of FTX last year, resulting in significant losses for many Australians. The proposed changes could potentially affect crypto exchanges such as Kraken, Swyftx, Coinbase and Coinspot.
Chalmers said,
We are releasing a proposal paper today that recommends making crypto exchanges and digital asset platforms subject to existing Australian financial services laws.
Jim Chalmers Better Crypto Protection
Under the proposal, crypto exchanges would be subject to current Australian laws regulating the financial services industry. This would include exchanges to acquire a financial services licence if they hold $1500 of a person’s assets or $5 million in total.
The treasurer stated that the proposal would also bring a minimum standard for tokens and other digital assets.
According to the paper, a quarter of Australians possess some crypto. With platforms holding billions in Australian assets, there is significant risk when exchanges collapse.
Chalmers explained, “The proposed reforms seek to reduce the risk of these collapses happening by lifting the standard of the operation of platforms and increasing oversight.”
Purpose of Australian Crypto Regulation
The paper also referenced regulations in Singapore, the EU, the UK, and Canada, highlighting that while different jurisdictions have different approaches, there are commonalities. The report stated that, although most crypto assets are not financial products, the rules and regulations for these products can effectively extend to cryptocurrencies, providing consumer protection.
The report outlines three main goals:
- Introducing a framework for industry innovation and growth
- Providing certainty and clarity for industry
- Protecting consumers and their assets
– Department of Treasury
The Australian Government’s proposal comes after the rejection of an initiative by Coalition Senator Andrew Bragg in September. The bill, known as ‘The Digital Assets (Market Regulation) Bill 2023,’ or colloquially as the ‘Bragg Bill,’ was rejected due to a lack of detail and deviation from current governmental policies.
Feedback Due by December
The report, available for public access on the treasury website, welcomes feedback until December 1.
The crypto industry has previously welcomed regulatory clarity as it is seen to increase trust and legitimacy.
Australian lawyer Bill Morgan, known on X as Belisarius2020, has often emphasised the need for global regulatory frameworks tailored to crypto. He submitted a response to the Australian Treasury’s token mapping consultation paper, advocating for the creation of a dedicated regulatory framework for cryptocurrencies in Australia.
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
