Australian Lawmakers Say Crypto Rules Need To be Revamped

According to a report that was commissioned by the Select Committee on Financial Technology and Regulatory Technology, Australia should create a new regulatory regime for cryptocurrency to encourage business onshore and to help the country to compete with the UK and Singapore. 

The extensive study was published on Wednesday. Lawmakers were called upon to make wide-ranging changes to encourage more crypto business into the country and to smooth existing legal pathways that currently prevent companies from accessing normal banking services. 

The report underscores tensions among policy makers around the world as crypto regulators try to balance protecting investors and taking advantage of the fast-growing crypto space. 

Among the changes that were recommended in the report was a new type of market licence for crypto exchanges, a clear framework for custody assets  and a number of new company rules. The rules focussed on new DeFi projects and are expected to commence next year, after an election. 

Andrew Bragg, Senator for New South Wales said in the report, “What we don’t want to do is put a new coat on an old hook. There’s a strong anti-competitive element in Australia where the incumbents don’t like innovation and their solution is to push new ideas into old regulatory frameworks that were designed for something else.” 

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Bragg went on to explain, “The agenda here is to try and be as good as Singapore or the UK. We want to be a world-leading jurisdiction for cryptocurrency.” Bragg added that he was confident in gaining support for his recommendations. 

The rising value of cryptocurrency over the last few years has increased confidence among Australian investors. A study that was published by YouGov last month found that more than a third of all Australian citizens under 50 either own or have owned digital assets. This puts them among the largest users of cryptocurrencies in the OECD group.

The surge in cryptocurrency has been met with concern among Australian authorities. The main concern is that many crypto businesses operate in offshore jurisdictions. 

According to Bragg, “the more that happens offshore, the more parts will migrate offshore… especially if they can’t get back incentives in Australia. It’s quite strategically important for us to have this capability onshore and be a strong digital economy.” 

The new type of market permit that has been recommended by Bragg would cover capital adequacy and responsible person tests as well as rules that cover decentralised autonomous organisations (DAOs). 

The report said, “DAOs do not crealy fall within any of Australia’s existing company structures. Legal liability for these organisations is currently unclear, and this regulatory uncertainty is preventing the establishment of projects of significant scale in Australia.” 

The report suggested using standards in the US state of Wyoming as a potential template for the new rules.