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Aussie treasurer promises crypto regulation next year amid FTX debacle

A spokesperson for Australian Treasurer Jim Chalmers said they are closely monitoring the fallout from FTX's collapse.

The Australian government has doubled down on its commitment towards a robust regulatory framework for crypto following the catastrophic collapse of FTX last week.

A spokesperson for Australian Treasurer Jim Chalmers said the Treasury said it is now planning on regulations to improve investor protection next year, according to a Nov. 16 report from the AFR.

The spokesperson made the announcement in light of the FTX’s fall last week, stating that it was closely monitoring the fallout from the FTX collapse, “including further volatility in crypto-asset markets and any spillovers into financial markets more broadly,” adding:

“These developments highlight the lack of transparency and consumer protection in the crypto market, which is why our government is taking action to improve the regulatory frameworks while still promoting innovation.”

The call for fast-tracked regulation comes as 30,000 Australians and 132 companies have fallen victim to Sam Bankman Fried’s fallen empire.

Michael Bacina, Digital Asset Specialist at Piper Alderman lawyers told Cointelegraph that regulation was the only way forward to re-establish the much-needed trust in trading platforms:

“Regulatory certainty is key to rebuilding trust in relation to centralized exchanges, and while law cannot eliminate bad behavior, it can set powerful norms and standards which make that behavior easier to find.”

While Danny Talwar, the head of tax at crypto tax platform Koinly added that a robust regulatory regime may fill in the holes where retail investors are left to be exploited:

“Following the FTX fallout highlights the need for sensible regulations within the crypto world, both domestically and across the globe, in order to eliminate uncertainty and remaining grey areas and provide clarity around digital assets — especially for retail consumers.”

“[But] the challenge will be ensuring that regulation does as intended to effectively protect consumers without suppressing industry growth,” he added.

As for what the regulation may entail, Talwar noted that while Australian trading platforms must comply with the Australian Transaction Reports and Analysis Centre (AUSTRAC), recommendations have been put forward to establish a market licensing regime.

The regime would include “capital adequacy and auditing standards to demonstrate the operational integrity” of trading platforms, which Talwar stressed is of great importance given that many exchanges are offering high yield products at a heightened risk in order to gain a competitive edge.

Related: Australian prudential regulator releases roadmap for cryptocurrency policy

Bacina also stated that the “measured approach” taken by the Australian government could also position the country to become an industry leader in digital asset regulation:

“When Australia brings in technology-enabling custody rules for centralized holders of crypto-assets, we will either be a leader in the space, or catching up, depending on how fast other jurisdictions, like Singapore and Europe, move to make rules.”

The Treasury is also looking to provide greater protection to investors by establishing a “token mapping” system, which will help identify how certain digital assets should be regulated, according to an Aug. 22 statement by Assistant Treasurer Stephen Jones.

Crystal Blockchain Study Reveals $16.7 Billion in Crypto Assets Stolen Since 2011

Australian government gives nod to 6 world leading crypto reforms

“What is clear is that if we embrace these developments, Australia has an enormous opportunity to capitalize on the convergence between finance and technology,” Treasurer Josh Frydenberg said.

The Australian government is seriously consider the rollout of central bank digital currency (CBDC) and has backed numerous forward-looking regulatory crypto-proposals as part of a new “payments and crypto reform plan.”

Treasurer Josh Frydenberg says the reforms "will firmly place Australia among a handful of lead countries in the world."

The reform plan is said to be the biggest shake-up of the Australian payments system since the 1990s, with part of the crypto-related groundwork set by the innovative proposals put forward by an Australian Senate Committee in September.

According to the Australian Financial Review, the government is in favor of six out of nine reforms proposed by the Senate Committee, including a licensing regime for crypto exchanges, laws to govern decentralized autonomous organizations and a common access regime for new payments platforms.

Two proposals relating to tax and financial compliance have been referred to their respective government bodies for consideration, while the government has knocked back another proposal related to renewable energy Bitcoin mining tax discounts.

Treasurer and deputy leader of the Liberal Party Josh Frydenberg outlined the government’s plans for crypto regulation, taxation and CBDCs in a speech today at the Australia-Israel Chamber of Commerce (AICC).

“What is clear is that if we embrace these developments, Australia has an enormous opportunity to capitalize on the convergence between finance and technology,” he said.

Concerning CBDCs, an unnamed senior government source told The Australian on Dec. 7 that a retail scale “RBA [Reserve Bank of Australia] backed Bitcoin or cryptocurrency” is currently being considered, and will be a key element of the government's regulatory reform on digital payments.

During his AICC speech, Frydenberg spoke bullishly on the crypto asset reform:

“For businesses, these reforms will address the ambiguity that can exist about the regulatory and tax treatment of crypto assets and new payment methods. In doing so, it will drive even more consumer interest, facilitate even more new entrants and enable even more innovation to take place.”

“For consumers, these changes will establish a regulatory framework to underpin their growing use of crypto assets and clarify the treatment of new payment methods,” he added.

One Senate committee proposal the government looks set to ignore is the 10% tax discount for Bitcoin (BTC) miners who use renewable energy. Michael Harris the head of corporate development at local exchange Swyftx, told Cointelegraph:

“We think this was a political consideration. The reality is that it’s probably going to be difficult for any government to segregate out an industry like BTC mining from other energy consumers, however laudable the intention.”

However Harris said that overall the “noises coming out of government at the moment are promising” as the government seems to have recognized the need to introduce consumer protection laws without stifling innovation.

“The devil will be in the detail though and we are especially keen to avoid a system that reduces customer choice by stacking the decks in favor of big, traditional financial players.”

Related: Australian women owning crypto has doubled in 2021: Survey

Crypto-friendly senator Andrew Bragg, who drove the recent crypto proposals, told Cointegraph in a statement that Frydenberg’s crypto and fintech reform plan will put “Australia on the tech map”:

“Australia will be a world-leading crypto hub under the Treasurer’s plan. Australian consumers will also benefit from new consumer protection rules.”

“The world is watching Australia which is now setting the global standard for crypto, payments and digital wallet reform,” he added.

Caroline Bowler, the CEO of local crypto exchange BTC markets welcomed the reforms, calling them a “major step forward to upgrade Australia’s one-size-fits-all regulatory framework in real-time.”

“It's great to see that the gaps in Australian regulation relating to digital financial products and the exchanges who support them are being finally addressed at the highest level of authority, and the Coalition Government is not shying away from the big issues surrounding crypto, payments and de-banking,” she said.

Crystal Blockchain Study Reveals $16.7 Billion in Crypto Assets Stolen Since 2011

Australian Senator Says Cryptocurrency Is Not a Fad — Government Won’t Stand in the Way

Australian Senator Says Cryptocurrency Is Not a Fad — Government Won’t Stand in the WayAustralian Senator and Minister of Financial Services Jane Hume said that “cryptocurrency is not a fad. It is an asset class that will grow in importance.” She emphasized that the government won’t stand in the way of crypto investing. “We have to let people make their own decisions,” she said. Australian Government Won’s Stand in […]

Crystal Blockchain Study Reveals $16.7 Billion in Crypto Assets Stolen Since 2011

Australian government offers $6M in grants to innovative blockchain teams

The Australian government has made two grants of up to $3 million available to blockchain teams targeting minerals certification and excise taxation solutions.

The Australian government has opened applications for grants  up to $3 million each in funding to blockchain projects targeting supply chain tracking in the minerals industry and tax tracking in the food and beverage sector.

Applications are open until April 29, with any sole trader, partnership, publicly-funded research organization, or entity incorporated in Australia that possesses an Australian Business Number eligible to apply.

The money will be used to fund two distinct pilots. The Food and Beverage Provenance pilot hopes to support a team addressing the complexities associated with spirits producers complying with excise taxation.

The Critical Minerals Pilot will support a project seeking to bolster supply chain integrity for the industry, and will also expect contributions to Australia’s National Ethical Certification Scheme to prove the provenance of locally produced minerals exported to international markets. The announcement noted:

“We expect that successful applications will be a collaboration between multiple organizations, including regulators.”

Applicants must demonstrate their projects meet the needs of the two pilots, meet the needs of regulators, reduce compliance burdens for businesses, and will support Australia’s blockchain start-up community.

“Your blockchain product will be unique, add value, and not duplicate products already in the market,” the document added.

Applicants must also demonstrate the viability and security of their platforms — including whether their blockchain has ever been the subject of a 51% attack — and how information submitted to their protocol is vetted and verified.

The Australian government has been proactive in encouraging development of its emerging DLT sector since unveiling its five-year National Blockchain Roadmap in early 2020.

In November, the government launched a trial using blockchain technology to share intergovernmental documents between local public servants and their counterparts in Singapore.

Crystal Blockchain Study Reveals $16.7 Billion in Crypto Assets Stolen Since 2011