Australia is starting to examine its domestic cryptocurrency holdings to better understand and regulate the sector.
To identify which digital asset tokens are being used in Australia and how they should be regulated, the government of Prime Minister Anthony Albanese will prioritize “token mapping” this year. According to Treasurer Jim Chalmers, a public consultation paper on the subject would be released soon.
The recommendation was one of 12 following a Senate investigation report from the previous year titled “Australia as a Technology and Financial Center.” The industry, which was eager to see if the ALP administration would accept the report, has warmly welcomed it.
So, what are the plans for regulations?
In addition to reviewing organizational structures and looking at the custody responsibilities for third-party custodians of cryptocurrency assets, Chalmers said the future Labor administration would first examine any holes in Australia’s regulatory and licensing frameworks. Additionally, it would consider additional consumer protections. He said,
“With the increasingly widespread proliferation of crypto assets — to the extent that crypto advertisements can be seen plastered all over big sporting events — we need to make sure customers engaging with crypto are adequately informed and protected.”
The Treasury will work on the following recommendations shortly – A licensing framework for crypto-asset service providers dealing in non-financial product crypto-assets, appropriate requirements to safeguard consumer crypto-asset custody, and a review of the decentralized autonomous organization (DAO) company-style structure.
“As it stands, the crypto sector is largely unregulated, and we need to do some work to get the balance right so we can embrace new and innovative technologies.”
According to the ministers, this project “hasn’t been done anywhere else in the world, therefore it will make Australia leaders in this work.” In fact, the Treasury’s token mapping will help define how crypto-assets and services should be regulated.
One of the main problems with regulating digital currencies, according to a report by an Australian parliamentary committee studying the industry in October 2021, is a lack of uniform definitions and classifications by national and international regulators.
The need for regulation in the country
More than a million taxpayers have connected with the cryptocurrency ecosystem since 2018, but “regulation is struggling to keep pace and adapt with the crypto-asset sector,” according to the statement.
The MPs asserted that the previous administration, which was led by Liberals, “dabbled” in regulating cryptocurrency assets through crypto-secondary service providers. This, “without first knowing what was being controlled.”