Internal documents reveal Australia’s potential timeline for crypto legislation: Report

March 6, 2023 Coin Telegraph

Internal documents from the Australian Treasury Department have revealed crypto legislation in the country could be a year away at the very least.

Crypto legislation in Australia could be dragged out past 2024 and beyond, with the government seemingly wanting to take its time in order to get a full picture of the industry, internal documents from the government have revealed.

The documents, obtained by The Australian Financial Review under freedom of information laws, reportedly reveal that the government aims to release consultation papers in the second quarter of 2023 and will hold stakeholder roundtables on crypto licensing and custody in the third quarter.

The industry has been waiting to see the next steps of the Australian Labor government’s token mapping exercise, which was announced three months after it came into power last year, with submissions closed on March 3.

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

However, according to the documents, final submissions to the cabinet are not expected until late in the year, possibly dragging out any decisions on crypto legislation well into 2024 and beyond.

One briefing from the department has also reportedly acknowledged that they expect frustration from crypto businesses and consumer groups over the long timetable.

“Treasury expects some stakeholders to be disappointed with the perceived delay in implementing a licensing regime,” according to a brief from Australian Treasurer Jim Chalmers, seen by AFR.

“For example, consumer groups seeking immediate protections and businesses seeking regulatory legitimacy.”

However, the Treasury believes that in the wake of FTX’s collapse, the demand for cryptocurrencies has “weakened significantly,” which could give it more time to hash out regulations.

"Treasury considers these concerns are somewhat mitigated by the current market conditions resulting in less consumer demand for crypto assets; and the need to complete the token mapping exercise to provide clarity on how any new licensing framework would operate in practice."

Meanwhile, the government has also revealed through the documents that it has created a dedicated “crypto policy unit” within the Treasury department.

In a meeting with treasury last November, the crypto policy unit reportedly flagged possible requirements for crypto licenses, including “fit and proper person” tests, capital requirements and obligations to report bad actors and scams in the industry. The unit also discussed beefing up consumer protections.

Last year, a survey from Australian crypto exchange Swyftx revealed in September that approximately one million Australians planned to purchase cryptocurrency for the first time over the next 12 months, bringing total crypto ownership in the country to over five million.

*According to Swyftx, 4.2 million Australians own crypto, with more planning to buy some over the next year. Source: Annual Australian Crypto Survey, Swyftx*

Australia bolsters crypto watchdogs in ‘multi-stage’ plan to fight scams

February 3, 2023 Coin Telegraph

Australian Competition and Consumer Commission

The new measures from the Australian government come as cryptocurrency scams skyrocketed 162% to $221 million in 2022.

The Australian government is bolstering its market regulator’s digital asset team as part of a “multi-stage approach” aimed at clamping down on crypto and ensuring proper risk disclosures from crypto firms.

A Feb. 2 joint statement by Australian Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones explained that the new measures are aimed at protecting consumers dealing with cryptocurrency.

The treasurers said the multi-stage approach would involve three elements, including strengthening enforcement, bolstering consumer protection, and establishing a framework for its token mapping reform.

This is why we're taking action on crypto. pic.twitter.com/17HG5nhsTz
— Stephen Jones MP (@StephenJonesMP) February 2, 2023

One of the main changes will be an increase in the size of the Australian Securities & Investments Commission (ASIC)’s digital assets team and “upping enforcement measures.”

Chalmers and Jones said that ASIC would focus on ensuring that the risks to consumers from crypto products and service providers are appropriately disclosed.

Cointelegraph reached out to ASIC to find out how many additional positions will be filled but did not receive an immediate response.

Meanwhile, the government is set to give new tools to the Australian Competition and Consumer Commission (ACCC), the country’s competition watchdog, to protect consumers from crypto-related scams. It noted scam losses involving crypto payments totaled $221 million in 2022.

The new tool will come in the form of a real-time data-sharing tool that the ACCC will use to identify and prevent crypto scams.

Consumer protection will also be bolstered when a framework is finalized to regulate the licensing and custody of digital assets to “ensure consumers are protected from avoidable business failures or from the misuse of their assets by service providers.”

However, this framework will not begin until mid-2023, and will likely take considerable time before being implemented into legislation.

“The previous government dabbled in crypto policy but never took the time to future‑proof our regulatory frameworks to protect consumers and guide this new and emerging class of assets," the treasurers said, adding:

We are acting swiftly and methodically to ensure that consumers are adequately protected and true innovation can flourish.”

The Australian Treasury released its token mapping consultation paper on Feb. 2, which attempts to determine which elements of the cryptocurrency ecosystem will be regulated and to what extent.

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

The multi-stage approach plan was fast-tracked after the catastrophic collapse of FTX in November, which impacted over 30,000 Aussies and 132 Australian-based companies.

Australian ‘token mapping’ consultation paper to release in early 2023: Treasurer

December 14, 2022 Coin Telegraph

Australian crypto regulation

The consultation paper will give an insight into how certain crypto assets should be regulated alongside frameworks for company licensing, asset custody and consumer protections under token mapping.

Australian Treasurer Jim Chalmers has revealed that the government will release a consultation paper in early 2023 as part of its token mapping initiative.

The crypto sector has received greater attention from Australian regulatory and enforcement agencies since the FTX implosion, with the government emphasizing the importance of providing greater consumer protection laws as soon as possible.

In a Dec. 14 statement, Treasurer Chalmers noted that the Anthony Albanese-led government is “taking action to improve the regulation of crypto service providers and ensure additional safeguards for Australians.”

As part of that process, Chalmers revealed the consultation paper will cover how certain crypto assets should be regulated alongside frameworks for company licensing, asset custody and consumer protections under its previously announced token mapping exercise.

“The next steps in the Government’s ongoing ‘token mapping’ work will include the release of a consultation paper in early 2023 to inform what digital assets should be regulated by financial services laws, and the development of appropriate custody and licensing settings to safeguard consumers.”

“Following the release of token mapping, the Government will consult on a custody and licensing framework next year before introducing legislation,” he added.

The latest comments from Chalmers adds to a promise from the Treasury in mid-November that it will develop and enact a robust regulatory framework for crypto in 2023.

The focus on crypto is also part of a push to “modernize Australia’s financial system” with the government set reform regulations on financial market infrastructure — particularly in relation to the Australian Securities Exchange's (ASX's) clearing system, payments systems and the Buy Now Pay Later sector.

Australia’s government has been largely pro-crypto but has reiterated the importance of allowing for innovation while keeping the public safe.

On Dec. 8, the Reserve Bank of Australia (RBA) published a stablecoin-focused report which suggested the regulators are “undertaking significant work” to figure out how to safely integrate them into the ecosystem.

“Stablecoins have the potential to enhance the efficiency and functionality of a range of payment and other financial services,” the report read.

Aussie treasurer promises crypto regulation next year amid FTX debacle

November 17, 2022 Coin Telegraph

australian government

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.

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.

Australia’s new government finally signals its crypto regulation stance

August 22, 2022 Coin Telegraph

Coin Telegraph

Australian Treasurer Jim Chalmers said that his government will improve the way Australia’s system manages crypto assets and provide greater protections for consumers.

Three months after being elected into power, the Australian Labor party has finally broken its silence on how it's planning to approach crypto regulation.

Treasurer Jim Chalmers announced a “token mapping” exercise, which was one of the 12 recommendations in a senate inquiry report last year on “Australia as a Technology and Financial Center.” The report was warmly welcomed by the industry which has been anxiously waiting to see if the ALP government would embrace it.

Aimed at being conducted before the end of the year, the token mapping exercise is expected to help “identify how crypto assets and related services should be regulated” and inform future regulatory decisions.

Cointelegraph understands that Treasury will also undertake work on some of the other recommendations in the near future, including a licensing framework for crypto asset service providers dealing in non-financial product crypto assets, appropriate requirements to safeguard the consumer crypto asset custody, and a review of the decentralized autonomous organization (DAO) company-style structure.

In a statement from Treasurer Jim Chalmers, along with Assistant Treasurer and Minister for Financial Services Stephen Jones, and Assistant Minister for Competition, Charities and Treasury Dr. Andrew Leigh, the Albanese-led government says it wants to reign in on a “largely unregulated” crypto sector.

“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

The statement noted that more than one million taxpayers have interacted with the crypto ecosystem since 2018, and yet, “regulation is struggling to keep pace and adapt with the crypto asset sector.”

The politicians claimed that the previous Liberal-led government had previously “dabbled” in crypto asset regulation through crypto secondary service providers “without first understanding what was being regulated.”

“The Albanese Government is taking a more serious approach to working out what is in the ecosystem and what risks need to be looked at first.”

Speaking to Cointelegraph, Michael Bacina, partner at Piper Alderman, said the token mapping exercise will be an “important step” to bridge the significant education gap within regulators and policymakers.

“Australia punches above its weight in blockchain right now but we have seen regulatory uncertainty lead to businesses leaving Australia,” he said.

“A sensible token mapping exercise which helps regulators and policy makers understand in depth the activities they are looking to regulate and how the technology interfaces with those activities should help regulation be fit for purpose and both support innovation and jobs in Australia while protecting consumers,” he added.

Caroline Bowler, CEO of BTC Markets said the move mirrors calls from many in the industry for "proportional, appropriate regulation" of the sector.

"The additional benefits of token mapping are many. It will provide greater clarity to crypto investors; aid companies in developing their own blockchain-based innovations; provide guidance to digital currency exchanges; as well as assist regulators in shaping an appropriate regulatory regime," she said.

However Dr. Aaron Lane, a senior lecturer at the RMIT Blockchain Innovation Hub, believes the token mapping exercise is something of a delaying tactic by the Labor government:

“Progress is progress — but it is disappointing that we are not further along the path to greater regulatory certainty for industry and greater protections for consumers.”

“Unfortunately, they’ve needed to buy themselves time with a token mapping exercise to allow them to get up to speed,” he added.

Progress is progress. But let's be clear though - it is not the first time token mapping has been done. See this, for example, from the UK in 2019. #cryptolaw https://t.co/rghWmklDJv
— Aaron Lane (@AMLane_au) August 21, 2022

Jim Chalmers

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