Australia is lagging on crypto regulation, which has significant implications on the growing market of digital assets. This delay has brought the Australian crypto industry together, as Jonathon Miller, Kraken’s Managing Director for Australia, explains.
Aussies love crypto, with nearly one in every four Australians having owned cryptocurrencies, the highest adoption rate globally. Despite this enthusiasm, Australia has been slow to establish a long-term regulatory framework for digital assets.
As global interest in digital assets rebounds, Australia risks lagging behind financial hubs like Singapore, Europe, and the UK due to the lack of clear regulations. Proper regulation can provide a rulebook for entrepreneurs and industry players, guide investors on which crypto projects to support, and protect consumers from unethical practices.
Formulating Digital Asset Regulation in Australia
Earlier this year, Kraken and other experts in Australia’s blockchain and digital asset sector collaborated to propose recommendations for a regulatory framework.
Here are some key takeaways from the convention which would form the basis of what Blockchain Australia will be advocating for as they seek to develop a robust and conducive regulatory landscape for the growth of crypto.
- Address Debanking of Crypto Businesses
Individual investors often face service refusals from traditional financial institutions, undermining confidence in the digital asset sector. Blockchain Australia suggests creating a standard framework for banks to assess risks when dealing with crypto businesses, reflecting on successful models like Hong Kong’s, to enhance confidence in crypto-fiat transactions.
- Enhance Information Sharing and Scam Prevention
To combat scams, improved information sharing among banks, digital asset exchanges like Kraken, and regulatory bodies is essential. Establishing industry-wide standards for scam prevention using advanced analytics can protect consumers and promote safer crypto transactions.
- Develop Clear Token Taxonomy
‘Crypto’ in fact encompasses a vast array of assets. Establishing a clear token taxonomy to distinguish between different types of digital assets will help investors make informed decisions and navigate the crypto market with greater confidence.
- Implement Consumer Education Programs
Consumers must be educated about scams regarding all aspects of digital assets. Education programmes in the crypto space should be accessible to a wide audience, including regulatory stakeholders, institutional participants, and individual investors. By creating a central hub for accurate educational materials aligned with industry needs, we can close the knowledge gap and encourage broader crypto adoption.
- Simplify Crypto Taxation
Simplifying tax reporting and compliance for crypto assets will help set clear expectations within the crypto community. Clearer tax classifications and standardised reporting processes would make it easier for everyone to fulfil their tax duties..
- Regulate Custody
Clear regulations on custody is essential, particularly for entities with direct control over consumer assets. A flexible regulatory approach that differentiate between direct and indirect control of assets will ensure that custody practices evolve with technological advancements while continuing to protect consumer assets effectively.
Inaction or missteps by policymakers could lead to capital flight and lose Australia’s leadership in a market projected to be worth $3 trillion in global trade by 2030. There is much at stake, and legislative bodies, crypto experts, and crypto firms must join hands to support the growth of crypto.