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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Don’t follow the US: Blockchain Aus CEO hammers ‘regulation by enforcement’

June 25, 2023 Coin Telegraph

appointment

Blockchain Australia, the country’s peak crypto industry body has announced a new CEO who wants to speed up the crypto regulatory process.

Blockchain Australia’s new CEO Simon Callaghan hopes the Federal Government will take its cues on crypto regulation from the United Kingdom, Hong Kong, and Singapore — and definitely not the United States.

In his new position, Callaghan aims to steer crypto rule-making in the country and avoid making similar moves to the U.S. Securities and Exchange Commission — which is suing the world’s two largest exchanges and has branded at least 68 tokens as securities.

“Regulation by enforcement is the equivalent of having a hammer and seeing everything as a nail. I don’t think that’s the right approach for Australia to be taking.”

*Callaghan gave a speech at Blockchain Week, announcing his tenure as Blockchain Australia's CEO.*

On June 26, Callaghan was announced as the industry peak body’s new CEO. He was most recently the digital assets program lead for Cambridge University and a co-founder of corporate service provider MOOPS Tech.

*A recent post from Simon Callaghan regarding leaving his Cambridge role. Source: Linkedin*

Callaghan’s previous roles include a year as the Asia lead for crypto lender Celsius as, but he left several months before the firm’s collapse. He has also had a brief stint at crypto lender Vauld.

His appointment comes after nearly a year of limbo following the departure of former CEO and industry advocate Steve Vallas in July 2022. The CEO role was briefly filled by Laura Mercurio in September last year, but she parted ways with the organization just weeks later over a difference of vision, effectively leaving Australia’s blockchain industry without an advocate for the better part of a year.

In his new role, Callaghan will represent the association’s 112 members, including Binance Australia, Circle, Ripple, and Mastercard, all of who are calling for clearer regulation, adding:

“Everyone wants to know where the goalposts are so people can operate their businesses, build their technologies and create jobs."

The Australian government has not taken a hardline stance on crypto, unlike American regulators and the Biden administration, Callaghan told Cointelegraph.

The Treasury has a “token mapping exercise” underway to determine how to classify various digital assets ahead of any legislation, which isn’t expected until at least 2024.

“We haven’t seen a strong position really one way or the other from this current government. That could be because they’re looking to take a considered approach, which I would argue is a good approach,” he said.

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

He hopes legislators take inspiration from Singapore, Hong Kong and the U.K. which are all developing regulatory schemes that aim to balance innovation with consumer protection.

“They see the benefit from the technology, the innovation, and the jobs it creates, as well as benefits to the broader financial sector.”

Reports earlier in June suggest the Hong Kong central bank has been putting pressure on major banks to accept crypto exchanges as clients, amid moves from the city to attract international crypto firms and investors.

“The fact that the Hong Kong monetary authorities are encouraging banks to work with the sector, I think that's the right approach,” Callaghan remarked.

In 2021, an Australian Senate committee report on digital assets recommended that crypto firms should be able to challenge debanking decisions and that banks should be required to conduct due diligence on firms rather than adopt blanket bans on the sector.

Two major Australian banks however recently imposed pauses, limits and outright blocks on certain payments to local crypto exchanges, both citing the growing threat of financial scams.

“I don't think you can just blanket everything in crypto as a scam, you actually need to look at the data,” said Callaghan, who revealed he’s already scheduled meetings “in the coming weeks” with the banks to further understand their position.

Opinion: GOP crypto maxis almost as bad as Dems’ ‘anti-crypto army’

Coinbase met with Australian banking regulators over local crypto regulations

March 16, 2023 Coin Telegraph

canberra

Coinbase's vice president of international policy told Cointelegraph the meetings took place in Canberra and Sydney and touched on the government’s token mapping efforts.

The Reserve Bank of Australia (RBA) and Treasury have been holding private meetings with executives from Coinbase, with discussions revolving around the future of crypto regulation in Australia.

Responding to Cointelegraph’s request for comment, an RBA spokesperson confirmed recent reports that these private meetings had occurred, stating that Coinbase met with the RBA’s Payments Policy and Financial Stability departments this week, “as part of the Bank’s ongoing liaison with industry.”

Tom Duff Gordon, Coinbase’s vice president of international policy who was reported to have been flown in for the meetings, also confirmed to Cointelegraph that meetings took place with Treasury in Canberra and Sydney.

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

Gordon said that the meetings touched on the government’s token mapping efforts, and Coinbase also “shared insights on global best practices concerning licensing and custody.”

The Australian Treasury's token mapping exercise was announced on Aug. 22, 2022, and is aimed at categorizing digital assets in a way to work them into existing regulatory frameworks.

A consultation paper was released by the Treasury on Feb. 3, for which the Treasury sought feedback from the crypto industry.

Gordon praised efforts from the Treasury, noting that “The Australian Treasury teams continue to impress us with their high level of sophistication and active involvement,” and adding:

“The Australian Treasury's token mapping exercise provides one of the most detailed and thoughtful papers we have encountered on the topic, setting a strong foundation for their forthcoming draft rules for crypto exchanges and custodians.”

Gordon expressed his desire to see the rules “later this year,” adding that he appreciated “the Treasury's comprehensive groundwork.”

In contrast, Coinbase’s co-founder and CEO Brian Armstrong has been critical of the approach to crypto regulation in the United States, echoing accusations that the Securities and Exchange Commission (SEC) is “regulating by enforcement” and claiming that the SEC wants firms to register with them despite there being no way to register.

Well said. There was no way to register (a disingenuous offer).

“Using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating.” https://t.co/6wVZZbQt23
— Brian Armstrong (@brian_armstrong) February 9, 2023

Documents recently obtained by the Australian Financial Review under freedom of information laws suggested that crypto legislation in Australia could be dragged out past 2024 and beyond, however, as final submissions to the cabinet are not expected until late in the year.

Coinbase expanded to Australia on Oct. 4, 2022, with Coinbase’s vice president of international and business development — Nana Murugesan — telling Cointelegraph at the time that it was “very impressed with the open door that we’ve received in Canberra and with different policymakers.”

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

March 6, 2023 Coin Telegraph

Australian Financial Review

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*

Aussie execs refute ‘argument’ to treat crypto as financial products

January 23, 2023 Coin Telegraph

Australia

The Australian Minister for Financial Services said there was a "good argument" to treat crypto as financial products in an interview on Jan. 22.

Australian crypto executives have urged caution over lumping all digital assets in the same boat as financial products, after recent comments from Australia's assistant treasurer on the ma

Speaking to the Sydney Morning Herald on Jan. 22, Assistant Treasurer and Minister for Financial Services Stephen Jones was commenting on the state of crypto regulation in the country.

He confirmed that the government was on track with its “token mapping” exercise this year to determine which crypto assets to regulate, with a consultation process "to start soon" with the industry, according to a crypto exchange executive.

However, Jones said he was “not that attracted” to setting up a completely new set of regulations for something that he believes in essence, is a financial product.

*Stephen Jones MP Assistant Treasurer and Minister for Financial Services. Source: Australian Labor Party website*

“I don’t want to pre-judge the outcomes of the consultation process we are about to embark on. But I start from the position that if it looks like a duck, walks like a duck, and sounds like a duck then it should be treated like one,” said Jones.

“Other coins or other tokens are being essentially used as a store of value for investment and speculation. [There is a] good argument that they should be treated like a financial product.”

The Australian Securities and Investments Commission (ASIC) and one of Australia's "Big 4" banks, Commonwealth Bank are reportedly also in support of regulating crypto as financial products, according to SMH.

Crypto execs warn of 'broad' approach

However, crypto market participants have urged caution over a broad-stroke approach towards crypto assets.

Speaking to Cointelegraph, blockchain and digital asset lawyer and Partner at Piper Alderman, Michael Bacina, cautioned that “a broad approach of classifying a technology as a financial product without a clear and usable pathway to licensing and compliance will likely send even more crypto businesses offshore and create more risk.”

Adam Percy, Swyftx General Counsel, echoed the sentiment in statements to Cointelegraph, stating:

"The trick is to protect consumers without regulating away well-run domestic digital asset businesses and forcing people to use off-shore exchanges subject to less rigorous checks and balances."

Meanwhile, Holger Arians, CEO of crypto on-ramp provider Banxa shared concerns that over-regulation could “seriously impact” the pioneering role that Australia’s been playing in crypto.

Caroline Bowler, CEO of the Australian crypto exchange BTCMarkets also warned against an “overly prescriptive approach” to regulation.

"This may put our digital economy on the back foot, in time, smothering our international competitiveness.”

Australian financial regulators have yet to officially formulate their regulatory framework, but in light of the FTX meltdown in November, Australian politicians and their global counterparts have seen greater urgency for action.

Jones said the FTX collapse “puts beyond doubt” the need for crypto regulation.

In September, Australian crypto entrepreneur and investor Fred Schebesta warned that rushing the token mapping could be problematic for the industry.

The intricacies of token mapping are not clear and Australia’s “fledgling” crypto industry needs to “align with the other major markets and their regulations,” he added.

Crypto lobby group Blockchain Australia concurred, arguing at the time that if all crypto assets were treated as financial products, it would harm crypto sector investment, and innovation, and result in the loss of industry-related jobs.

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.

Rushing ‘token mapping’ could hurt Aussie crypto space — Finder founder

September 23, 2022 Coin Telegraph

Coin Telegraph

Australian crypto entrepreneur Fred Schebesta said Australia already has a “fledgling” crypto industry but needs to “align with the other major markets."

Australian crypto entrepreneur and investor Fred Schebesta has described the Australian government's prioritization of token mapping as “wonderful,” but warns that rushing it could lead to detrimental effects on the economy.

Schebesta's comments come after Australian Treasurer Jim Chalmers released a statement on Aug. 22 stating that the “treasury will prioritize token mapping work" in 2022 to show how “crypto assets and related services should be regulated.”

Speaking to Cointelegraph, Schebesta believes Australia already has a “fledgling” crypto industry but needs to “align with the other major markets and their regulations.”

Schebesta added that the "intricacies” of token mapping are not clear, and "things are changing as well."

Schebesta is an Australian entrepreneur and investor — best known as the co-founder of Finder, an Australian comparison website. Schebesta is also a co-founder of crypto investment fund Hive Empire Capital and an advisor for Balthazar, an NFT gaming platform.

He explained that if “we rush” — the token mapping exercise could turn away crypto companies, particularly if there's a “very different approach” to other countries.

Schebesta stressed that it's not the time to "rush it out,” but take the time “to just take it easy and really, really do some deeper analysis.”

The token-mapping announcement from Australia's new Labor government came three months after it came into power, breaking a long silence on how it would approach crypto regulation in the country.

At the time, Treasurer Chalmers said the government wanted to reign in on the “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," he said.

While many in the industry lauded the announcement as an "important step" for the industry, some were disappointed that there the country was not "further along" the path to regulatory certainty.

Australian lawyer Liam Hennessy, partner at Gadens told Cointelegraph that Australia has been at the "forefront of the crypto developments,” but worries that the country is "slowly falling behind the U.K. and U.S.” due to failure to create rules for those “in the crypto industry, in particular those in financial services.”

Hennessy believes that while token mapping is vital, it shouldn't be the primary focus for regulators.

"It should be secondary to actually creating some tax rules and regulations around licensing that we can give to our businesses that really need to hear it so they can compete with our global competitors.”

He fears that Australia is falling into the trap of “thinking that a little bit of attention from the government will solve the problems,” which he believes that the token mapping exercise "to some extent, is being viewed as.”

Schebesta said he spoke at a senate hearing in 2021 where he highlighted “Australia would have a huge influx of new businesses [...] because it's a safe, stable, and great regulatory place to build their business,” adding that “tens of thousands” of jobs would be created “in the next two to three years.”

Australia to Stocktake Crypto Holdings Ahead of Regulation

August 23, 2022 Bitcoin.com

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

token mapping

Crypto execs warn of 'broad' approach

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