Last week the Labor government confirmed it is working with industry and regulators to provide effective settings for digital assets that balance “innovation with consumer protection” via the existing AFSL framework.
But Crypto.com’s head of Australia, Vakul Talwar, noted in an analysis piece shared with InvestorDaily that it is not just the Labor party looking to be at the helm of this change.
“Having been in Canberra inside Parliament House over the last few weeks with senior politicians and bureaucrats, I have seen a distinct change in attitude towards crypto,” he said.
“All sides of politics are meeting with stakeholders and industry experts to hear their thoughts and concerns, with a view to act swiftly and with conviction.”
Emerging from these conversations is the prioritisation of payments, stablecoins and tokenisation as key areas of interest, with local politicians seeing opportunities for Australia to be a pioneer in innovation.
According to Talwar, both sides of the chamber are looking to incorporate these emerging use cases within their proposed regulatory frameworks.
“While politicians are working hard, the crypto world is working even harder,” he added, noting that 70 senior global leaders from the cryptocurrency sector arrived in Sydney earlier this month to discuss themes impacting digital asset and blockchain industries.
“There was a strong sense of urgency in the room for how we can make Australia, not just on-par with other nations, but a global leader,” Talwar said.
“To achieve this, we need fit-for-purpose, principles-led regulation which balances consumer protection with the ability for the sector to operate efficiently and with clear direction, rather than enforcement through litigation and creating precedents in a court of law.”
Last year the Australian Securities and Investments Commission (ASIC) opened Info Sheet 225 for public consultation, which seeks to provide regulation in the absence of legislation.
While acknowledging ASIC’s progress in advancing the conversation, Talwar cautioned against overregulation that could push firms offshore, citing the proposal for cryptocurrency exchanges to hold an “impractical” market operating licence, which is currently held by only two companies in Australia, as a key example.
“It took years to receive and cost millions of dollars to do so. These barriers would have minimal impact in protecting consumers and act as a handbrake on global investment, job growth and innovation in the Australian market,” he said.
Off the back of Labor’s Statement on Developing an Innovative Australian Digital Asset Industry, released on Friday, the Crypto.com executive said it is positive to see the government aiming to frame regulation moving forward via the existing AFSL framework.
“It is fundamental that we make strong inroads into developing fit-for-purpose legislation by year end, as a failure to do so risks Australia losing out on foreign investment and innovation moving to other jurisdictions that offer more clarity in crypto regulation,” he said on Friday.
“In addition to harnessing the AFSL regime, the draft legislation can build off the learnings and successes of jurisdictions already making great progress in crypto regulation – UAE, Singapore and the EU for example, as well as the US, which has recently passed its Financial Innovation and Technology for the 21st Century (FIT21) Act, a bipartisan initiative described as a pivotal moment for the digital asset ecosystem.”
Crypto industry no longer in limbo
Mena Theodorou, co-founder at cryptocurrency exchange Coinstash, on Friday explained that the lack of clear framework to date has been frustrating for businesses operating in Australia’s digital asset space.
Following Labor’s pledge to provide more established guardrails, Theodorou says this is a “significant step” for the industry.
“The federal government’s latest regulatory announcement has been on Labor’s agenda for a while, so today’s development is not a surprise,” he said. “This will provide much-needed clarity around regulation, which has been in limbo for years.”
“The policy would see the government bringing crypto exchanges and fintechs holding digital assets under the same governance standards as traditional financial services.”
“It will, however, be critical that these rules are applied in a way that makes sense for crypto, rather than simply copying traditional finance regulations onto a new industry.”
The co-founder added that the inclusion of stablecoins within the formal regulatory framework, given their increasing use in payments and trading, was inevitable.
“Having clear guidelines on how they should be issued and managed could help provide more confidence for users and businesses that rely on them, which could also be a boon for greater institutional support of stablecoins in the ANZ region.”
