Crypto Regulation’s Future: Insights from Blockchain Australia’s Chairman
Michael Bacina, Chair Blockchain Australia and partner at Piper Alderman lawyers, spoke at the Australian Crypto Convention about the current state and outlook of crypto regulation in the country.
ASIC’s Role and Custody Issues
Bacina said, in 2021, the Australian Securities and Investments Commission (ASIC) gained a strong understanding of custody in relation to exchange-traded products, sparking interest in ETFs in Australia. This was seen positively by the industry. However, after a change in government, most of the Senate Select Committee’s favourable recommendations for the crypto sector remained unimplemented.
The CASSPrs consultation raised the idea that all tokens might be classified as financial products, a concept paralleled in the U.S. with the term “securities.” There was also a token mapping consultation, which many hoped would clarify the government’s stance on the nature of different tokens. This led to the development of the digital asset platform paper, which is currently being discussed.
Austrac and Exchanges
Bacina stated that under the existing Australian regulations, crypto exchanges are only required to register, not to obtain licences. This is a significant distinction because registration with the regulatory body Austrac offers less oversight than a licensing system. Additionally, entities dealing with crypto assets classified as financial products should have an Australian Financial Services License (AFSL), which, as of now, mostly applies to funds.
Austrac can’t turn down a registration unless there’s certain specific reasons, whereas under licensing there’s far broader reasons under which licences can be declined. It’s not just a distinction that lawyers and government like to make in law.
Digital Asset Facility
Australia has developed its own terminology in the realm of digital assets, diverging from global norms. They have introduced the concept of a “digital asset facility,” which primarily refers to the custody of digital assets. This approach does not aim to regulate individual third-party wallets like Metamask or Trust Wallet, nor does it concern software development involving the handling of private keys or seed phrases. The focus is on the custodial aspect of digital assets within this uniquely Australian framework.
So unlike America where you’ve got Gary Gensler calling everything a security and then losing in court on a number of cases on that very point.
Future of Crypto Regulation in Australia
The implementation of a licensing regime for digital assets is a central focus, according to Bacina. The best-case scenario for passing regulations is projected to be late next year or early 2025, with a potential 12-month implementation period following the legislation’s passage. This timeline could be affected by political events, such as elections, with full licensing requirements possibly coming into effect by 2026.
What we’re really looking at is licensing probably coming into force and people have been required to have a licence to operate by 2026, which in crypto terms feels like forever, right?