With the price of bitcoin climbing to over $106,000 on Monday, members of the industry body are calling on the government not to delay the introduction of a formal regulatory framework that both protects consumers and fosters innovation.
Talking to InvestorDaily, Ben Rose, Binance Australia and New Zealand general manager, cautioned if regulation is delayed, “there is a risk that Australia will cede ground to other nations”.
“Following years of discussions across various political parties, there are now live consultations happening across the sector with government, industry and exchanges actively working to tailor Australia’s globally leading regulatory framework so that it works not just for traditional finance but also for digital asset platforms. Doing so would position Australia as a global leader – we say that can’t happen quickly enough,” Rose said.
“We see first-hand this debate happening globally.”
Rose highlighted Japan, the UAE, and France as some of the “early movers” with clear economic benefits already being witnessed in those markets.
“Their economies are being rewarded through increasing innovation and investment.”
According to Rose, Australia is a mature market with over 400 cryptocurrency exchanges and ranking 40 out of 155 in Chainalysis’ 2023 Global Crypto Adoption Index.
“Fifteen per cent of Australians have traded crypto according to the 2023 Australian Investor Study, with 31 per cent of those holding crypto being next-gen young investors. Binance-commissioned research showed one in five crypto investors having more than $200,000 invested overall.
“We have well-developed financial markets across different products, from capital market to equities to forex. In this context, Australia has a unique opportunity to move quickly and bring in a licensing regime that protects consumers, drives innovation, and grows the economy.”
Rose pointed out that not only does a licensed environment improve consumer protections and confidence, it also drives innovation.
“Globally, regulated markets are attracting investment and leading the way in product innovation, giving greater choice for consumers,” he said.
Ultimately, a strong regulated sector – that balances consumer protection and innovation – will also be good for the Australian economy.
“Reinforcing credibility and certainty drives existing participants to innovate and invest, attracts new competitors that come in and disrupt. It creates more jobs, drives more tax revenue, and grows the contribution the sector makes to the economy.”
Local crypto players came together at industry body Blockchain Australia’s policy forum in Sydney last month to produce a policy submission with the goal of transitioning the Australian crypto market into a regulated digital assets industry. The forum then sent a delegation of local crypto exchanges and Web3 businesses to Canberra last week to submit its joint policy recommendations.
“While there are many pressing issues on the government’s agenda, getting this regulatory framework in place quickly is critical as ultimately, we are talking about cementing Australia’s role in the financial services landscape of tomorrow,” said Rose.
“We have a choice ahead of us: join the likes of Dubai, France, and Japan in the fast lane towards that landscape or stay in the slow lane and get left behind.”
Last October, the government released its proposed framework for regulating digital asset platforms. Under these proposals, digital asset platforms would be incorporated within the existing financial services framework, which would involve introducing a new type of financial product called a “digital asset facility”.
Platform providers will require an Australian Financial Services Licence, granted by the Australian Securities and Investments Commission (ASIC), to operate their platforms, if these reforms are enacted as proposed.
Speaking at last week’s Blockchain APAC Policy Week, ASIC’s Alan Kirkland said: “In short, our desired outcome is a clear set of rules that maintain market integrity and mitigate the risks to consumers and investors – backed by mechanisms that promote compliance with these rules and enable us to enforce them effectively.”
Kirkland explained that under existing law, ASIC only regulates crypto assets and businesses to the extent they involve financial products or financial services. Directors’ duties and other requirements related to companies also apply.
While the regulator waits for the government to announce the final policy settings and legislation, Kirkland said it has “already begun thinking about implementation – such as our processes and guidance”.
“This includes a number of informal discussions with some in the industry.”
Last week, the regulator handed down a permanent ban to the director of a crypto fund, whom ASIC deemed to lack “integrity, trustworthiness and judgement”.
