Although not everyone in Australian politics is as bullish on digital assets as Senator Andrew Braggs, there has been a concentrated push to position the country as a global leader of innovation in this sector. But if Australia plans to supersede crypto hubs like the US, the UK, and Singapore, it has work to do and little time to waste. The Senate Committee for Australia as a Technology and Financial Centre released a 168-page report containing 12 key recommendations on how to accomplish this objective.
Here are its results.
The four keys to making Australia a crypto hub
The report boils down to four key recommendations, the first being to introduce new crypto-specific licences and regulations. It acknowledges the sector’s massive potential and financial regulators’ faulty approach that tries to impose trad-fi regulation on a new asset class. That’s why it specifically stresses the need for a specific market licencing regime for digital exchanges and a tailored custody regime for digital assets.
Next is introducing decentralized autonomous organisations as entities into Australian corporate law. This would elevate DeFi to the status of “legitimate” business entities and signal that regulators are serious about taking DeFi seriously. Thus far, only the state of Wyoming has gone that far, and although it is a step into the unknown, it could ultimately yield a massive first-mover advantage to Australia. However, don’t hang your hopes too high since changes to the Corporations Act in Australia are as rare as black swans.
The report also asks for improved and clearer tax rules for crypto-to-crypto transactions. The report recommends taxing only “a clearly definable capital gain or loss,” although the details on this would need to be hammered out. We have repeatedly reported rising crypto ownership Down Under, but the more people use crypto for financial transactions, the more people will have questions about taxable events.
Finally, tax incentives for green crypto mining would be a major reform and a boon for the sprawling Australian mining industry. It may arguably be the recommendation with the highest impact if approved since crypto mining has been facing backlash over greenhouse gas emission concerns.
So, what could go wrong?
A whole lot!
First, the political will to implement all of these may not be as high as the enthusiasm of Senator Braggs pushing for crypto-friendly regulation. Political incumbents may also try to stall on some issues or flat out oppose them, be it for political reasons or because they disagree with blockchain being a revolutionary technology. Even if the report can circumvent these two banana skins, it will take a lot of negotiating and bickering over details that need clarification.
Still, it shows that the crypto industry is ready to get serious about regulation. Moreover, the report highlights that a one-size-fits-all approach will not do. DAOs are not DeFi, and DeFi is not sending crypto to your friends. With the numerous use cases of cryptocurrency comes the need to tailor policies to all of its sub-niches.
Fingers crossed that Australian regulators agree on that.
