Crypto regulation in Australia desperately needs change, according to industry experts and Australian crypto advocates. Several sources have recently come forward with criticism and demanded a more proactive approach for regulation. Crypto proponents lament the timid and lacklustre approach regulators are taking and fear Australia could decidedly fall behind in a key growth sector of the future.
Blockchain Australia calling for more engagement
According to Blockchain Australia, crypto regulation in the country has been marked by standoff-ish attitudes on the part of regulators. The blockchain industry body accused the government of deliberately painting the blockchain space as the “wild west” and adapting unhelpful narratives that do nothing to advance innovation. While the blockchain industry has proactively been seeking contact, the government has taken a reactive approach and engaged only during extreme hype, leading to poorly comprehending the space.
The association called for a more coordinated and graduated approach to ensure innovation and competition in the space while also enhancing consumer outcomes. Crypto couldn’t afford to wait for years for regulatory clarity and needed a safe harbour for local crypto service providers. By establishing a working group, communication between industry and authorities could be facilitated. Blockchain Australia underscored the need to improve the country’s standing as a technological and financial hub and emphasized this wasn’t possible without engagement and guidance by regulators in the short term and a comprehensive legislative framework in the long term.
The challenges ahead for crypto regulation in Australia
The association’s comments came as a reaction to a new round of consultation to review the federal policy framework around cryptocurrency and blockchain technology in Australia by the Select Committee on Australia as a Technology and Financial Centre. Chaired by Senator Andrew Bragg, who has been lauded as a forward-thinking member with an astute understanding of fintech developments, the committee faces no easy challenge. It has to develop a clear and flexible policy approach for cryptocurrency businesses that ideally would deliver economic growth as was seen during boom times of high commodity prices. A failure to do so would lead to the blockchain industry heading off to more crypto-friendly jurisdictions that would put themselves ahead of Australia regarding decentralized technology.
Currently, Australian law does not treat cryptocurrencies as money and taxes profits from miners as income and profits from trades and investments as capital gains. Officially, no central bank digital currency is planned.
The committee will need to find ideas to reconcile promoting Australia as a fintech and blockchain hub and protecting consumers’ rights and investments. Currently, no single regulator exists, and the federal government has not taken a consistent position on cryptocurrencies, much to the frustration of blockchain companies.
However, there are several options the committee could explore to kickstart regulation. First, it could look at the practice of “de-banking” that has troubled crypto companies and unnecessarily complicated their growth. It is up to regulators to decide what practices banks can and cannot adhere to. Second, extending the fintech sandbox to blockchain companies would provide more data about new ideas and how they work in practice. Lastly, the committee could recommend introducing more innovative policies like giving companies the possibility to get accredited for accepting cryptocurrency payments. For Australia, crypto regulation done right would put the country’s financial sector on the right track for the future.
