Liberal senator Andrew Bragg has labelled the government’s defence of its efforts to draft, much less pass, financial services legislation as “deeply unserious answers to what is a very serious question”.
Drawing the ire of Bragg at the Senate estimates hearing on Wednesday afternoon was the lack of progress on getting cryptocurrency regulations in front of Parliament, with the senator again questioning Treasury officials if the problem lay in Financial Services Minister Stephen Jones’ office.
“I reckon about two or three estimates hearings ago, when I was asking [Treasury] about the government’s plan to regulate crypto, I think I said at the time that I had no confidence that the government would ever deliver a bill on crypto. This is despite the Treasurer promising to do so after the FTX collapse. Now we’re at the back end of this Parliament about to have an election. That was a good prediction,” Bragg said.
He added: “My question is, what’s happened here? The Treasurer of the country has promised that the Labor Party would regulate crypto to protect consumers and investor confidence, and in three years, nothing’s happened.
“I just want to know what went wrong; did it get lost in Jonesie’s office? Did the dog eat the bill? What happened?”
James Kelly, first assistant secretary digital, competition and payments division at Treasury, responded that the answer is much the same as the last time Bragg inquired.
“We’re progressing the drafting of an exposure draft of the bill to give effect to the government’s pledged reforms,” Kelly said.
On learning that the draft bill was still not completed, Senator Bragg questioned why it has taken three years to draft a cryptocurrency bill.
“It’s taken three years to go from various consultation processes and then kind of working up the instructions for OPC [the Office of Parliamentary Counsel] and then beginning to engage with OPC,” Kelly said.
“Now, there are other priorities for government that affected how early we’ve got to the OPC drafter, but we’re working on it now.”
While Bragg argued this was a sign the legislation had “clearly been deprioritised”, Finance Minister Katy Gallagher said it was indicative of a “very busy legislative agenda area in that portfolio”.
“It’s a huge amount of [legislation] that comes through the Senate in this portfolio, and there’s been a lot of consultation done on crypto, including with the industry, and taking all of the feedback that’s necessary,” Gallagher said.
The minister also pushed back on the notion that the bill would not be passed during this term of Parliament, despite no draft bill being completed and an election fast approaching, noting that the Senate can “deal with things pretty quickly”.
Senator Bragg replied: “I mean, all I’d say is, these are deeply unserious answers to what is a very serious question that a lot of Australians would be expecting you to be able to keep your word that you said you would protect consumers but also incentivise investment in Australia through digital assets.
“We’re now at the end of this term. I’m sure the minister is sincere in maintaining the government’s commitment, but we all know that there’s no way that a bill will pass in this term.”
Earlier this month, shadow assistant treasurer and shadow financial services minister Luke Howarth blasted the Albanese government for failing to act on cryptocurrency regulation.
In a statement made to InvestorDaily following an address at a Stand With Crypto event, Howarth criticised the government for repeatedly promising fit-for-purpose cryptocurrency legislation in 2022, 2023 and 2024, only to “come clean” that draft legislation won’t be ready until at least 2025.
“Australians are increasingly investing in crypto and deserve the protections afforded by fit-for-purpose regulation. This is not a priority for Albanese’s minister and it has been left too late, with no hope of it being legislated this term,” Howarth said.
“[It] can be added to the long list of financial services reforms that have fallen by the wayside,” he said.
In contrast, Howarth pledged the Coalition’s unwavering support for the cryptocurrency and blockchain sectors.
“The Coalition supports a fit-for-purpose regulatory regime for digital assets and stablecoins – one that provides certainty, protects consumers, fosters innovation and allows Australian businesses to compete on a global scale,” he said, vowing to work quickly to put regulation in place.
‘Killing investment’
Howarth also fired a warning shot over the Australian Securities and Investments Commission’s (ASIC) current approach to cryptocurrency, accusing the regulator of “regulation by enforcement”, which he argued was driving operations offshore and stifling innovation.
In his statement to InvestorDaily, Howarth also accused the corporate regulator of “pre-emptively shaping” the regulatory landscape for digital assets before a comprehensive legislative framework is established.
“These operations are likely to move offshore if ASIC starts regulation by enforcement and litigation under existing laws which don’t fit neatly, changing its long-standing position.
“This will create unnecessary compliance costs and an environment of regulatory uncertainty that is unwelcoming to both domestic innovators and international investors. Australian blockchain businesses with transformative potential will likely consolidate or leave,” he said.
At Senate estimates on Wednesday, Bragg also questioned whether ASIC’s approach was a concern for Treasury.
“Do you accept that if the Parliament failed to legislate a scheme, then the corporate cop or the regulator that is closest to that market’s proximity is then going to be asked by market participants for almost legal advice, or advice on how they can run their businesses, because there’s no regulatory framework in this country?” the senator asked.
“And therefore you end up having legislation through a grudge almost enforcement approach, all through a regulator sort of making it up, even though it’s not their role to make laws or policy.”
Kelly argued that, while there is “probably merit in the proposition” Bragg put forward, the cryptocurrency bill would require ASIC defining the boundary of current legislation.
“It was the case though that ASIC was always going to have to go in there and be clear about what that boundary is, because the bill, once introduced, was going to have to rely on that,” he said.
“The government’s stated reforms are based on the fact that there is a set of things within the financial services space, and it’s up for ASIC to make what clear what those things are. ASIC was always going to have to do this. From my point of view, it’s actually advantageous in drafting the bill to make sure we get to the outcomes we want that we’re able to see that before the actual bill is completed.”
Bragg signed off that the delay is “killing investment”.
