The Labor Government has announced a proposed multi-step plan to establish a new cryptocurrency regulatory framework in Australia.
In his joint media release, the Treasurer of Australia highlighted the importance of providing greater protection for consumers engaging in cryptocurrency assets and related services. Despite Australia’s economic push into the digital asset space, regulation is not keeping pace. Currently, the crypto sector is largely unregulated, resulting in various scams, improper advertisements, and misfortunes for Australian cryptocurrency users. To increase consumer safeguards, the Labor Government is beginning stakeholder consultation with key industry players and regulators to shape a market that emphasises consumer safety.
As the first point of regulatory reform, the Treasury has prioritised “token mapping”. Token mapping refers to identifying unique characteristics of all digital assets in Australia, including the specific type of crypto asset, the integral code, and other distinctive features. By classifying crypto tokens in this way, the Treasury will be able to identify how these assets are to be regulated and propose an appropriate framework. This is a first-of-its-kind initiative that has not been taken by any other international regulator.
The Treasurer also commented on the missteps of the previous government, particularly with its narrow approach to the options markets. The Treasurer has commented that the Labor Government will take a “more serious approach” to understanding how the cryptocurrency ecosystem operates and the key risks that need to be addressed. The aim for the now is to:
- identify notable gaps in the present regime
- progress work on a licensing framework
- review innovative organisational structures
- look at custody obligations for third-party custodians of crypto assets, and
- provide additional consumer safeguards.
The Treasury is presently preparing a public consultation paper on token mapping that is set to be released later this year.
For a full reading of the media release, see here.
