With the global market capitalisation of crypto nearing US$2.5 trillion and around a quarter of Australians currently invested, the absence of local regulation is increasingly glaring, according to Ben Rose from Binance.
“It has never been more important for Australia to introduce a formal regulatory framework that both protects consumers and fosters innovation. If we do not, there is a risk that Australia will cede ground to other nations,” Rose told InvestorDaily.
At Blockchain Week in Sydney last month, Treasury and the Australian Securities and Investments Commission (ASIC) highlighted that regulation of digital currencies is firmly on the agenda, with live consultations underway following years of cross-party discussions.
Australia lags behind global counterparts such as Japan, the UAE, and Europe, which have already taken proactive steps. According to Rose, these economies are experiencing benefits in terms of enhanced innovation and increased investment.
“Regulation is a must if Australia hopes to attract investment, remain at the forefront of digital innovation, and most importantly, protect local investors from bad actors.”
Rose pointed out that a licensed environment boosts consumer confidence, ensuring providers are regulated and comply with local laws.
“The lack of such a requirement in many countries around the world was a major concern for investors following a series of business collapses within the cryptocurrency industry in previous years.
He highlighted that with crypto becoming mainstream, consumer demand and options are growing. Currently, over 400 cryptocurrency exchanges are registered in Australia, which ranks 40th out of 155 in the Chainalysis 2023 Global Crypto Adoption Index.
“Users in Australia clearly are interested in crypto and comparatively more than many other markets, and we should capitalise on our position as the global crypto industry continues to grow. However, without clear guardrails and licensing regimes, it is difficult for investors to have the confidence to choose Australian platforms and providers.”
Beyond consumer protection, Rose emphasised that strong regulatory environments globally drive innovation and attract investment.
He continued: “Globally, regulated markets are attracting investment and leading the way in product innovation, giving greater choice for consumers.
“In a fast-moving sector like crypto, the foundation of a robust regulatory framework must be built on basic principles of maximising protections for users while fostering a safe and sustainable ecosystem that can grow responsibly. Getting this balance of protection versus innovation right is important.”
This conversation is timely for Australia, as Monochrome Asset Management recently launched the Monochrome Bitcoin ETF (IBTC) on the Cboe Australia exchange, highlighting compliance under new regulations requiring specific licences for significant crypto holdings.
Local economy poised to benefit
Rose stressed that a well-regulated sector benefits the economy by spurring innovation, attracting investment, and creating jobs.
“It creates more jobs, drives more tax revenue, attracts foreign direct investment and grows the contribution the sector makes to the economy,” he said.
Supporting this, a Bloomberg report highlighted that global crypto firms and traditional financial firms like Fidelity and BlackRock are increasing hiring for crypto-related roles.
Rose also noted that a robust regulatory regime provides an opportunity to diversify the economy. For instance, the local mining industry contributes a significant 14 per cent to Australia’s GDP, whereas the financial services sector contributes just over 7 per cent.
“Over-reliance on one sector is a concern for investors, policymakers, and the Australian public.”
As such, he said, investors can leverage Australia’s financial markets to quickly establish a licensing regime that protects consumers, drives innovation, and grows the economy
“Together, we are cementing Australia’s role in the global financial services landscape of tomorrow. We have a choice ahead of us: join the likes of the UAE, Europe, and Japan in the fast lane towards that landscape, or stay in the slow lane, and get left behind,” Rose said.
