Australia’s token mapping to be ‘tech agnostic,’ says Treasury official

June 26, 2023 Coin Telegraph

Trevor Power hopes the framework will fall closer on the “spectrum” to the EU’s MiCA than the current regulatory position in the United States.

The Australian Treasury’s token mapping of digital assets will adopt a “tech agnostic” and “principles-based” approach in order to define crypto assets, according to a Treasury official.

Trevor Power, an Australian Treasury assistant secretary, told Cointelegraph on June 26 at Australian Blockchain Week that the framework will be structured to easily classify tokens based on their function and purpose.

“The token mapping paper spends a lot of time talking about the token, the system, the value delivered for the very purpose of trying to structure whatever regulation such that it draws on those principles so then a token can be placed within that,” Power said, adding:

“It's trying to be tech agnostic. It's not trying to be token specific.”

Power said “it’s fair to assume” that crypto-specific legislation will appear sometime in 2024 — but that it ultimately depends on how it is received by Australia’s lawmakers.

Crypto assets that change their function and utility over time will likely be subject to review, according to Power.

“If they become very significant [...] Then they will graduate through the regulatory system.”

He stressed the token mapping regulation would need to be “robust” in order to operate in a “tech-neutral” and “principles-based manner” to account for such changes.

*The Australian Treasury’s Trevor Power speaking at Australian Blockchain Week 2023. Source: Cointelegraph.*

The Treasury considers token mapping to be essential to understand how the crypto ecosystem interacts with Australia's existing financial regulatory frameworks.

Power said the token mapping exercise hasn’t been influenced by the recent parade of regulatory enforcement action by the United States Securities Exchange Commission (SEC).

Instead, Power hopes a crypto framework will fall closer on the “spectrum” to the European Union’s Markets in Crypto Assets (MiCA) regulation.

Power also welcomed U.S. and foreign digital asset firms to consider the Australian market — provided they abide by the token mapping framework, which intends to strike a balance between innovation and consumer protection:

“There are two arms to every component of regulation. One is to make sure that that framework is there, and the second one is to make sure there's room for industry to grow and be innovative.”

The Treasury conducted a consultation process between Feb. 3 and March 3, which came roughly six months after the token mapping framework was introduced on Aug 22.

Consultation open! Today we released the token mapping consultation paper. This consultation is part of a multi step reform agenda to develop an appropriate regulatory setting for the #crypto sector. Read paper & submit views @ https://t.co/4W2msjhP9B @ASIC_Connect @AUSTRAC pic.twitter.com/OGHuZEGvDp
— Australian Treasury (@Treasury_AU) February 2, 2023

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Hong Kong security regulator to issue crypto license guidelines in May

April 27, 2023 Coin Telegraph

Bitget

The crypto business guidelines were reportedly revealed by the chief executive of Hong Kong’s Securities Futures Commission, Julia Leung.

The Hong Kong Securities Futures Commission (SFC) is reportedly set to release cryptocurrency exchange licensing guidelines next month.

The plans were reported by Bloomberg on April 27, which cited comments from the SFC’s chief executive Julia Leung on Thursday.

The incoming guidelines will provide support to crypto trading platforms that will be able to offer trading services to retail investors on June 1.

Leung said the consultation process on the licensing regime received over 150 responses from interested parties, according to Bloomberg.

Anti-Money Laundering (AML) and Know Your Client (KYC) regulatory requirements were some of the key considerations made in the Feb. 20 report that Leung was presumably referring to.

Julia Leung, CEO, the Securities and Futures Commission Hong Kong speech at Bloomberg #virtualasset #esg #wealthconnect #ifc pic.twitter.com/M1eCHLP1VZ
— Finance Mandarin 漢通金融學院 (@FinanceMandarin) April 27, 2023

While confirmation awaits for most prospective Virtual Asset Service Provider (VASP) licensees, some trading platforms have already begun offering crypto-related services to investors under the SFC’s supervision.

OSL and Hashkey Group are amongst the few trading platforms to have already received licenses from the SFC, according to Reuters.

Despite Hong Kong’s ambition to become the next crypto hub, not every trading platform has chosen to stick around for the long haul.

Bitget — a crypto exchange with $1.4 trillion assets in reserve — announced on April 24 that it will cease offering services to its Hong Kong customers when the Hong Kong VASP regime takes effect on June 1.

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Hong Kong’s crypto rules set a high bar for ‘good reason,’ says SFC adviser

April 5, 2023 Coin Telegraph

Coin Telegraph

Lucy Gazmararian, an advisory board member to Hong Kong’s securities regulator, said its crypto rules might present short-term challenges to crypto startups.

The standards for Virtual Asset Service Providers (VASPs) in Hong Kong are set “incredibly high,” as the Securities and Futures Commission (SFC) wants the crypto industry to match the same compliance standards as traditional financial firms.

Speaking to Cointelegraph at the Hong Kong WOW Summit, Lucy Gazmararian, the founder of crypto venture firm Token Bay Capital and an SFC Fintech Advisory Group member, explained that while “the bar is set high,” it’s in place for a “good reason.”

“The standards are incredibly high because [the SFCs] approach is to ask VASPs to apply the same standards that existing financial institutions like huge banks and huge asset managers have to comply with.”

The SFC published a consultation paper on Feb. 20, which considered whether licensed VASPs should serve retail investors, and what standard of investor protection measures should be imposed.

Anti-Money Laundering and Know Your Customer policies were also discussed.

Gazmararian said these high standards might pose challenges for the crypto industry in Hong Kong over the short term.

“The issue is that crypto businesses are often in the startup phase,” she explained. “Many have funding but not huge amounts, not hundreds of millions.”

“To comply with the framework does incur significant costs,” she added, citing the need for local VASPs to have insurance, independent assessment reports and store crypto in cold storage.

“A criticism has been if you’re a startup crypto company, how do you even get started? Is that going to stifle the industry?”

With a solid regulatory framework in place, Gazmararian believes more well-capitalized financial firms will be willing to help promising startups get off the ground.

“I think companies that do get the license are going to be upholding the most stringent standards so the bar is set high but I think for good reason,” Gazmararian said.

“Cryptocurrency platforms are part of the entire Web 3.0 ecosystem, and we strongly support the development of the entire Internet ecosystem.
— ivanferrari.eth.zk (@ferrarivarese) April 3, 2023

The SFC encouraged individuals, corporations and crypto firms to review the 361-page consultation paper and provide feedback.

The securities regulator wants these entities to share their views and point to things that may have been missed because they are “absolutely focused” on getting everything right, Gazmararian explained.

Submissions for feedback on the consultation paper closed on March 31.

In recent months, Hong Kong has made considerable ground in establishing itself as the world’s next crypto hub.

More than 80 digital asset firms have expressed interest in establishing a presence in Hong Kong over the last few months, according to a March 20 statement by the Secretary for Financial Services and the Treasury, Christian Hui.

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Bank of England thinks digital pound can co-exist with private stablecoins

February 8, 2023 Coin Telegraph

API

The central bank wants an e-GBP to be retail-focused and could form part of a “mixed payments economy” alongside cryptocurrency stablecoins.

The United Kingdom is a step closer to launching a central bank digital currency (CBDC) after releasing a consultation paper explaining the proposed digital pound, which the public has nicknamed “Britcoin.”

The 116-page consultation paper was jointly released on Feb. 7 by the Bank of England (BoE) and the U.K. Treasury. A technology working paper was also released delving into the technical and economic design considerations.

Despite the rise of privately-issued stablecoins in recent years, the paper said that CBDCs such as the digital pound can co-exist in what they expect to be a “mixed payments economy.”

“In much the same way that cash exists alongside private money, the digital pound does not need to be a dominant form of money in order to meet its public policy objectives. The digital pound could exist alongside other forms of money, including stablecoins.”

While the BoE and the Treasury hope to have a digital pound launched by 2025 “at the earliest,” at this stage, they’re still not 100% certain that it will be launched at all.

“The Bank and HM Treasury consider a digital pound is likely to be needed in the UK though no decision to introduce one can be taken at this stage,” the paper stated.

The paper explained the primary motivator behind launching the digital pound is to ensure U.K. central bank money remains “an anchor for confidence and safety” in the country’s monetary system and to “promote innovation, choice, and efficiency in domestic payments.”

The model for the digital pound as outlined in the consultation paper. Source: Bank of England.

To achieve this feat, the e-GBP would need to be largely adopted in the retail ecosystem through a series of “public-private partnerships.”

“For the digital pound to play the role that cash plays in anchoring the monetary system, it needs to be usable and sufficiently adopted by households and businesses.”

Users will be able to access e-GBP by connecting to private sector-run API that in turn connects to the core ledger.

*The platform model of the digital pound. Source: The* *Bank of England.*

Other programmability features including smart contracts and atomic swaps — which enables assets to move across networks — will be enabled.

While the paper states the private sector would help build such infrastructure, it also considers imposing individual limits between 10,000 to 20,000 British pounds ($12,000 to $24,000) to essentially prevent its use as a savings account:

“A limit on individual holdings would be intended to manage those risks by constraining the degree to which deposits could flow out of the banking system. That is important during the introductory period as we learn about the impact of the digital pound on the economy.”

Privacy concerns that many in the crypto community have voiced were also acknowledged. Without going into detail, the paper stated an e-GBP would be subject to “rigorous standards” of privacy and data protection.

It further explained that users will “have at least some level of privacy” because transactions will be recorded anonymously on the core ledger.

The paper said a “digital pound will not be anonymous” as user verification is needed “to prevent financial crime” but added neither the government nor the BoE would have access to personal data. Source: The *Bank of England*

The paper outlined, however, that an e-GBP may impact the business models of commercialized banks through what is known as “bank disintermediation” — where fewer deposits are made into commercial banks.

“The digital pound would not fundamentally alter the traditional channels of money creation, but it might affect monetary stability. [...] Bank disintermediation might affect the transmission of monetary policy to the real economy,” the consultation paper stated.

The central bank also believes the digital pound could bring about more financial inclusivity among the U.K. population.

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Aussie consumer group calls for better crypto regs due to ‘lagging laws’

May 31, 2022 Coin Telegraph

accc

Australian consumer group CHOICE outlined its crypto regulatory framework in a submission to the country’s Treasury calling for the new federal government to prioritize crypto in its financial services reforms.

Australian consumer advocacy group CHOICE has called on the federal government to provide better protection for crypto investors while submitting a proposed regulatory framework for cryptocurrency exchanges operating in the country.

The regulatory framework was submitted in response to the federal Treasury's consultation paper for “crypto asset secondary service providers” (CASSPs) defined as firms providing custodial crypto wallets and exchange services. CHOICE commented:

“As it stands, enforceable protections in the unregulated cryptocurrency market are somewhere between negligible and non-existent.”

Outlining four main areas in its framework, the group called for a single definition of crypto for better regulation, a license for exchanges in line with current financial licensing, and for them to be bound by consumer protection laws to prohibit things like misleading advertising.

Finally, CHOICE said crypto exchanges need to enact measures for preventing fraudulent payments and reimburse customers when they occur.

The Australian Securities and Investments Commission (ASIC), the chief financial services regulator in the country has previously warned that cryptocurrency is not recognized as a financial product. Commenting on the current regulations CHOICE’s senior policy adviser Patrick Veyret said:

“The crypto market is booming, but our laws are lagging behind, more and more Australians are purchasing crypto assets such as Bitcoin and Ethereum without adequate consumer protections.”

Veyret added that there are instances where “people have lost all of their savings with no ability to get their money back” citing the recent fall of TerraUSD (UST) as a “clear example of the extreme volatility in this unregulated market.”

According to an ongoing survey conducted by CHOICE, only around one in ten Australians purchased crypto such as Bitcoin (BTC) or Ethereum (ETH) in the past year, and 71% who signaled an interest in the crypto market didn’t purchase due to concerns of price volatility and scams.

CHOICE reported that a separate survey of 1,034 Australians conducted in March and April revealed over half of respondents didn’t know if trading crypto came with consumer protections like those which apply to the stock market. Around the same amount of people (50%) believed such consumer protections for crypto trading should be enacted.

As reported by Cointelegraph in August 2021, the first six months of that year saw investment scams in Australia cost investors more than $50 million with crypto scams netting bad actors over $25 million, more than half of the reported losses.

A more recent report in March by CHOICE found the main competition regulator the Australian Competition and Consumer Commission (ACCC) confirmed nearly 10,500 reports of cryptocurrency scams in 2021, with losses of around $92.6 million for the year.

The government is taking action on crypto despite the current lack of regulations, in March the ACCC took Meta to court for publishing scam celebrity crypto ads, and the ACCC has stated it wants to support the crypto industry but notes challenges with regulating such innovative technologies.

The country’s new leading party, the Labor Party, has faced criticism in the past for its lack of a cryptocurrency policy and Veyret called on the new government to make regulating crypto a top priority:

“The new federal government needs to rein in the unregulated crypto industry as one of its financial services reform priorities, Australians expect the same level of consumer protection and regulatory oversight for crypto assets as they do with other financial products.”