Australian crypto executives urged caution not to equate all crypto assets with financial products, following recent comments from Australia’s assistant treasurer on cryptocurrencies. Here are the details…
Important conversations about cryptocurrencies are taking place in Australia
Speaking to the Sydney Morning Herald on January 22, Stephen Jones, Deputy Undersecretary of the Treasury and Minister of Financial Services, commented on the state of crypto regulation in the country. According to a crypto exchange executive, he confirmed that the government is on the right track with a “token mapping” exercise this year to determine which crypto assets will be regulated through a “soon-starting” consultation process with the industry.
But Jones said he was “not that impressed” by creating an entirely new set of regulations for what he believes is essentially a financial product. “I don’t want to prejudge the results of the consultation process that we are about to begin,” Jones said. “Other coins or other tokens are mainly used as a store of value for investment and speculation. [There is] a good argument that they should be treated like a financial product,” he added. According to the report, the Australian Securities and Investment Commission (ASIC) and Commonwealth Bank, one of Australia’s “big 4” banks, also reportedly support the regulation of cryptocurrencies as financial products.
Crypto executives warn of ‘broad’ approach
However, crypto market participants urged caution regarding a broad-time approach to crypto assets. Michael Bacina, a blockchain and crypto asset attorney and Piper Alderman Partner, warned:
A broad approach to classifying a technology as a financial product without a clear and usable path for licensing and compliance will likely send even more crypto businesses abroad. It also creates more risks.
Swyftx General Counsel Adam Percy echoed this sentiment in his statements. “The trick is to protect consumers without regulating well-run local crypto-asset businesses and forcing people to use less strictly regulated offshore exchanges,” Percy said.
“Overregulation” could impact Australia’s crypto situation
Meanwhile, Holger Arians, CEO of crypto on-ramp provider Banxa, shared his concerns that overregulation could “seriously affect” the leading role Australia plays in crypto. Caroline Bowler, CEO of Australian crypto exchange BTCMarkets, also warned against an “overly prescriptive approach” to regulation. “This could eventually overwhelm our digital economy and stifle our international competitiveness,” she said.
As we reported on cryptokoin.com, Australian financial regulators have yet to formally formulate their regulatory framework, but in light of the FTX meltdown in November, Australian politicians and their global counterparts saw a greater urgency to act. Jones said that the collapse of FTX ” leaves no room for doubt” about the need for crypto regulation.
In September, Australian crypto entrepreneur and investor Fred Schebesta warned that rushing token issuance could be problematic for the industry. He added that the intricacies of token mapping are not clear and that Australia’s “novice” crypto industry needs to “align with other major markets and their regulations.” Crypto lobby group Blockchain Australia agreed at the time, arguing that if all crypto assets were treated as financial products, it would hurt crypto industry investment and innovation and lead to the loss of industry-related jobs.
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