With the results of the recent Australian federal election still fresh in the minds of citizens, the thing dominating cryptocurrency news has to do with the immediate future. The future regulation of the crypto market in Australia has been a hot-button topic and the major topic of discussion has been reform of regulatory conditions.
Labor Party leader Anthony Albanese spoke going into the election cycle about needing to make major changes when it comes to the regulatory aspects of the cryptocurrency market.
With Albanese set to begin a second term, now is the time to tackle the industry’s most outstanding issues. Industry leaders have already begun calling on Albanese to make legislation of digital assets one of the top priorities in order to keep Australia in lockstep with global leaders.
Proposed Cryptocurrency Regulatory Framework
Prior to the federal election, the Australian government made a proposal introducing new crypto framework regulatory changes. The aim wasn’t to drastically change everything, but to extend the framework in a way that adheres to current financial services laws while also tackling the issue of debanking.
On March 21, the Treasury Department issued a statement that custody services, cryptocurrency exchanges, and even some brokerage firms that store or trade crypto would fall under the proposed new laws.
Now that the Labor Party will maintain its hold in Parliament, all eyes will be watching to see whether these proposed regulations will hold. We have seen a few minor shifts, like the August 2022 consultations held by the Australian government in order to tackle the growing issue of crypto regulatory framework.
Within this newly proposed framework come some clarification. For instance, startup and small-scale platforms that don’t meet the necessary size specifications will find themselves exempt from these rules. The same goes for firms creating digital assets or developing blockchain-related software so long as they are not financial products.
Similarly, payment stablecoins will be handled as a stored-value facility as part of the Australian government’s Payments Licensing Reforms. That said, some wrapped tokens and stablecoins will remain exempt from these rules.
Albanese and the Labor Party have also made a vow to work with the four largest Australian banks to get a better understanding of both the nature and extent of de-banking. Part of this process will be a review of central bank digital currency as well as a review of the Enhanced Regulatory Sandbox. This allows businesses to test out new financial products without the need for a license.
Coinbase Leading the Charge
With the re-election of Albanese and the Australian Labor Party on May 3, pressure will be on. After all, the party has promised to make reforms but has not met the promise of drafted legislation within the first 100 days as the Liberal Party proposed.
Leading the charge for reform is Coinbase and its managing director for APAC John O’Loghlen. O’Loghlen noted on May 5 that Albanese and the Labor Party has “the opportunity and the responsibility to move quickly on the issue.” O’Loghlen also called for the establishment of a Crypto-Asset Taskforce sometime within the first 100 days. The focus would have “the aim of bringing forward legislation that protects consumers, promotes innovation, and stops the exodus of talent and capital to other markets.”
Binance is also getting involved. Joy Lam, the head of global regulatory and APC legal for Binance, acknowledged that Binance has been consulting with Australian Treasury officials going back to late 2023.
“Timing is really quite critical now because obviously it’s something that has been discussed and kicked around for quite a few years,” Lam said in a May 2 interview. She also noted the UK release of drafted regulations and the European Union’s MiCA legislation.
“So there’s a very clear shift. Everyone’s moving towards providing the regulatory framework that is needed for the industry to develop in a sustainable way,” Lam continued. “So time is of the essence.”
The Goal of Drafted Crypto Legislation
Jim Chalmers of the Treasury office said that exposure draft legislation could be released for consultation sometime this year. He also noted that any potential legislation reform would be “phased in over time to minimize disruptions to existing businesses.”
The Treasury has made it a goal to draft legislation on payments system modernization and regulating digital asset platforms by the end of June. Lam, however, isn’t all that confident. “I don’t know whether this quarter specifically is still sort of the timeline,” Lam said.
The Labor Party has already faced challenges with critics suggesting that no action was taken by Albanese during his first term. That said, it appears that the long-term results may have been better. Albanese appears to be looking to follow in the footsteps of former U.S. President Joe Biden, who took a much harder line on banks when it comes to cryptocurrency dealings while handling the majority of coins as securities.
Since the “Statement on Developing an Innovative Australian Digital Asset Industry” put out by the Australian Treasury Department back in March, the approach to cryptocurrency has gained traction.
In that statement, many key priorities have been established, like using the Australian Financial Services License (AFSL) to lead the charge on regulation of payment stablecoins and Digital Asset Platforms. The overall focus is on safe custody of client assets from central providers while dancing around issues as is it relates to decentralized finance platforms.
Sandbox and Tokenization
As mentioned previously, the government will review the Enhanced Regulatory Sandbox. The aim of the review is to provide the necessary space for innovations from digital asset startups without the hassle of red tape. There are also potential opportunities as it pertains to tokenization.
Lam noted that these changes show that the Australian government is listening to the cryptocurrency industry. “It reflects the industry feedback that they would have received in 2023 as a result of the consultation, as well as the changing landscape because obviously it’s been evolving pretty quickly internationally,” she said. “They do have the benefit now of looking at what has worked and hasn’t worked in other jurisdictions, and really building on those lessons.”
Final Thoughts
With the election freshly over, the time is now for Albanese and the Labor Party to act on cryptocurrency reforms. Delays will no doubt bring on further criticism of their regime and some industry experts feel that it could put Australia behind global leaders.
With framework proposals already having been submitted, we could see serious changes coming down the pike before long. With a target date for suggested legislation by the end of June, the regulatory framework for the Australian cryptocurrency market could look drastically different by the time the year ends.
As cryptocurrency ownership continues to grow in Australia, these moves are becoming more necessary than ever. With greater clarity and regulation, it could lead to substantial growth in the cryptocurrency market as well. Industry leaders are watching patiently and excitedly to see what the Australian Treasury Department will do as the next step.
