Australian crypto leaders urge caution on regulation
Following recent comments by Australia’s Assistant Treasurer on the subject, cryptocurrency leaders in Australia have warned against lumping all digital assets into the same category as financial goods. They say this is particularly important in light of the latest regulatory developments.
In an interview with the Sydney Morning Herald published on January 22, 2018, Assistant Treasurer and Minister for Financial Services Stephen Jones provided an overview of the current position of cryptocurrency legislation in the country.
According to the head of a cryptocurrency exchange, he confirmed that the government was on track with its “token mapping” exercise it carried out this year to determine which crypto assets should be regulated. He also stated that a consultation process “which will start soon” was planned with the industry. Jones, on the other hand, said he was “not that attracted” to the idea of establishing a whole new set of laws for something that, in his view, functions primarily as a financial product. “I do not want to make any assumptions about the results of the process of gathering feedback that we are going to carry out.
But my starting point is that if something walks like a duck, quacks like a duck and looks like a duck, then it should be treated as if it were a duck, said Jones.
“Other currencies and tokens are basically used as a kind of store of value to engage in financial speculation and investment. There are compelling arguments for treating them in the same way as a financial instrument.”
According to the Sydney Morning Herald (SMH), the Australian Securities and Investments Commission (ASIC) and the Commonwealth Bank, one of Australia’s “Big 4” banks, are both positive to regulate cryptocurrencies as financial products. ASIC is Australia’s financial regulator. The Commonwealth Bank is one of Australia’s four largest banks. However, players in the cryptocurrency sector have cautioned against taking a blanket approach to cryptocurrencies and their assets.
“The trick is to protect consumers without deregulating well-run domestic digital asset companies and forcing people to use offshore exchanges subject to less stringent checks and balances,” it concludes. “The phrase ‘the trick is to protect consumers without regulating away well-run domestic digital asset companies’ closes the loop.” Meanwhile, the CEO of a company that offers cryptocurrency-on-ramps, called Holger Arians, expressed concern that excessive regulation could “seriously harm” the pioneering role that Australia has played in the cryptocurrency industry.
An “overly prescriptive approach” to regulation is something that should be avoided, according to Caroline Bowler, CEO of Australian cryptocurrency exchange BTCMarkets. Because of this, our digital economy could fall behind in the future, which would stifle our ability to compete internationally.
In light of the FTX disaster in November, Australian lawmakers and their global counterparts have felt the urgency of action. However, the Australian Treasury has not yet publicly formulated its regulations.
According to Jones, the failure of FTX “puts beyond doubt” the need for cryptocurrency regulation.
Fred Schebesta, an Australian entrepreneur and investor in the cryptocurrency space, issued a warning in September that accelerating the process of mapping tokens could be detrimental to business.
The complexities of token mapping are not fully understood and it is crucial for Australia’s “new” cryptocurrency economy to “align with the other main markets and their legislation,” he further explained.
Cryptocurrency advocacy organization Blockchain Australia shared this sentiment, arguing at the time that if all cryptoassets were considered financial products, it would be detrimental to investment and innovation in the cryptocurrency sector and lead to job losses associated with the business.
