The federal government has prepared a consultation paper in the first step to determining how best to regulate crypto assets.
A statement released this morning by treasurer Jim Chalmers says that the government will be seeking stakeholder comments on what it is calling “token mapping” — a world first — as a way of deciding what consumer protection measures are required.
There are laws regulating financial advice and also the manner in which companies offer their shares to investors, but there is little regulation with crypto assets.
Mapping crypto assets and related services will enable the government to see precisely where the regulatory holes are and how to respond to them in protection of vulnerable consumers.
“The Australian Taxation Office estimates that more than one million taxpayers have interacted with the crypto asset ecosystem since 2018,” the statement says.
“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 while safeguarding consumers.”
Part of the reason for the token-mapping consultation is the visible and growing prominence of crypto assets as investment options.
“With the increasingly widespread proliferation of crypto assets — to the extent that crypto advertisements can be seen plastered all over big sporting events — we need to make sure customers engaging with crypto are adequately informed and protected,” the statement says.
“The previous government dabbled in crypto asset regulation but prematurely jumped straight to options without first understanding what was being regulated. The Albanese government is taking a more serious approach to work out what is in the ecosystem and what risks need to be looked at first.”
Gaps in regulation of crypto assets were explored in the October 2021 final report of a Senate Select Committee on Australia as a Technology and Financial Centre.
The report says that regulators and governments have been underprepared for the way in which crypto assets have grown in popularity.
“With a global market now totalling in the trillions of dollars, the tremendous potential of blockchain technology and decentralised finance is becoming recognised by mainstream institutions and investors,” the report says.
“Recent survey data shows that 25 per cent of Australians either currently or have previously held cryptocurrencies, making Australia one of the biggest adopters of cryptocurrencies on a per capita basis.”
The committee found that Australia lagged behind in developing regulations to deal with this type of digital asset.
“This is creating uncertainty for project developers, businesses, investors and consumers.,” the report says
“Two prominent Australian-founded digital currency exchanges have recently gained regulatory licenses in Singapore and the UK respectively, showing what Australia is missing out on by not developing an appropriate framework here.”
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Protection and tax the focus of government’s cryptocurrency review
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