Australia Pushes a Private Bill to Streamline Crypto Regulation

2023-05-11, 03:21

[TL; DR]

The Australian Senator, Andrew Bragg, submitted the “Digital Assets (Market Regulation) Bill 2023” which may lay a foundation for cryptocurrency regulations in Australia.

If approved, the bill will protect the interests of both the consumers and crypto investors in Australia.

Currently, Australia applies the existing financial regulations in Australian crypto markets.

Introduction

Despite the risks inherent in cryptocurrencies, blockchain technology remains a transformative innovation. As a result, governments are working on ways to reduce crypto risks and protect the consumers. They are introducing relevant laws that govern the operations of crypto businesses. Today, we look at how Australia is progressing in terms of creating relevant legislation.

Australia’s new crypto bill

Recently Senator Andrew Bragg submitted a private bill entitled “Digital Assets (Market Regulation) Bill 2023” whose aim is to protect consumers and promote the interests of investors. This bill covers various issues relating to cryptocurrencies and the blockchain such as custody requirements, stablecoins and licensing of crypto exchanges, among others.

Senator Andrew Bragg - Australifintec

Generally, in Australia ministers are responsible for proposing bills. However, there is also room for senators like Andrew Bragg to introduce their bills which, however, have a slimmer chance for approval than the ones coming from the ministers. Even if they are passed, they often take months or even years to get approval.

Bragg’s bill comes a few months after the 12 recommendations which the Senate Select Committee on Australia as a Technology and Financial Centre submitted in October 2021. Also, the senator blames the government for failure to enact relevant crypto legislation that protects the Australian consumers from the impact of industry-wide events such as the collapse of the FTX.

At the same time, the senator said that Australia can become a hub of digital assets if there is well-crafted and enforced crypto regulation in the country.

The main aim of the law

As said, The Digital Assets (Market Regulation) Bill 2023 aims to provide a framework for the licensing of crypto exchanges and stipulate the services they should offer. It also lays out who should issue out stablecoins and the reserve requirements as well as their custody. Specifically it sets out the governance procedure, security requirements, minimum capital requirements and the segregation of the customers’ funds.

It is important to note that the bill requires crypto businesses like exchanges to register with the Australian Securities and Investments Commission. They can also have foreign licenses to operate in the country.

Furthermore, if passed the bill will empower the Australian Securities & Investments Commission (ASIC) with the power to monitor and investigate the operations of crypto businesses. As such, its mandate will include enforcing the regulation. Likewise, it will spell out the civil and criminal penalties for the various misconducts.

In fact, the bill includes other critical obligations for crypto businesses and users. For example, it stipulates the necessary record keeping and reporting procedures for digital asset custody. Another important development is that there is public consultation pertaining to crypto regulation that is going on.

The implications of the Senator’s bill

If the bill is passed into law crypto businesses would need to operate in a specific manner. For example, only registered crypto firms and projects will provide products and services in the country. The owners of unlicensed businesses will be prosecuted.

Again, businesses that will not abide by the new crypto legislation will pay fines or be deregistered. This is because the relevant regulatory authority will monitor crypto projects for compliance with the law.

Exchanges will be required to hold the minimum reserves which the law stipulates which will likely prevent bank runs when the customers want to redeem their digital assets.

The issuers of stablecoins will need to register their businesses and hold the required reserves which are equal to the face values of their tokens. As an example, a stablecoin issuer with 10,000 tokens pegged at 1.1 to the Australian dollar, should have a reserve of $10,000 AUD.

stablecoin Issuers to keep reserve - Bitcoin.com

The current crypto regulations in Australia

Currently, Australia does not have specific crypto regulations. However, it uses the existing law to govern crypto activities in the country. For example crypto businesses are expected to comply with the anti-money laundering and counter-terrorism financing (AML/CTF), the financial services regime under the Corporations Act 2001 (Cth), Competition and Consumer Act 2010 (Cth) and the Australian financial services licence (AFSL).

For example, according to the Corporations Act 2001, digital assets are classified as investment products or exchange traded products. Also businesses that offer crypto services like lending should have a credit under the National Credit Consumer Protection Act 2009 (Cth).

According to the existing Australian crypto regulations, cryptocurrencies like BTC and ETH are classified as properties and are legal in the country. Therefore, people can buy, sell or trade them as they wish. Businesses can accept cryptocurrencies as a means of payment. In addition, cryptocurrencies and other digital assets like NFTs are subject to capital gains tax (CGT).

Australian Securities and Investments Commission (ASIC) is the primary crypto regulator in the country and oversees all cryptocurrency related activities. On the other hand, the ATO ensures that crypto businesses comply with the country’s taxation laws.

Conclusion

The submission of “Digital Assets (Market Regulation) Bill 2023” by Senator Andrew Bragg shows the commitment that legislators have in establishing a clear crypto regulatory framework for Australia. The implementation of regulatory standards for Australia’s crypto industry will increase crypto adoption in the country. Currently, crypto regulations in Australia are fragmented as they are based on existing financial laws.

FAQs

Is cryptocurrency governed by law in Australia?

Cryptocurrency in Australia is governed by existing financial laws such as the Anti-money laundering and counter-terrorism financing (AML/CTF) and the financial services regime under the Corporations Act 2001 (Cth). However, the country does not have specific crypto regulations.

What is the Australian regulation for crypto?

The Anti-money laundering and counter-terrorism financing (AML/CTF), the financial services regime under the Corporations Act 2001 (Cth), Competition and Consumer Act 2010 (Cth) and the Australian financial services licence (AFSL) are examples of pieces of legislations that govern cryptocurrency in the country.

Is cryptocurrency legal in Australia?

Cryptocurrency and other digital assets are legal in Australia. Cryptocurrencies such as BTC and ETH are classified as properties. Therefore, Australian citizens can buy, sell and trade various cryptocurrencies.

Which bank allows cryptocurrency in Australia?

CommBank offers crypto related services in Australia. For example, it allows individuals to buy cryptocurrencies using AUD.

Author: Mashell C., Gate.io Researcher

*This article represents only the views of the researcher and does not constitute any investment suggestions.

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