Senior government officials joined crypto luminaries and corporate heavyweights at an industry event on Monday to unveil a proposal for a suite of new rules for cryptocurrency and digital assets, in the latest evidence of the sector’s mainstream acceptance.
Declaring herself a “crypto convert” and a “digital disciple”, Jane Hume, Federal Minister for Superannuation, Financial Services and the Digital Economy said it was a risk Australia could “leave tens of billions of output” and “hundreds of thousands of jobs on the table” if regulators took an overly heavy-handed approach to the sector.
Her speech, delivered at the Blockchain Week event on Monday, included the announcement of a new consultation paper covering cryptocurrency exchange licensing regimes and custody arrangements for digital assets. The government also released terms of reference for a Board of Taxation review of the taxation of digital assets, which is expected to be completed later this year.
“The decisions we make now are very similar to the decisions that we made then,” she said in a speech drawing parallels between the potential for the cryptocurrency sector and the opportunities available in the equity markets before deregulation in the 1980s, or during the internet boom of the late 1990s.
“We can either keep in place the right regulatory settings to capture the benefits of the crypto asset revolution or we will just lose out.”
Calling the crypto ecosystem a “new kind of virtual frontier,” she promised to “never stand in the way of my fellow Australians chasing the opportunities and the benefits.”
“The Morrison government stands with you,” Hume said.
The announcements on Monday fall under planned reforms to Australia’s payment system that the government says are the biggest in 25 years. Federal Treasurer Josh Frydenberg previously pledged to conclude consultations on crypto exchanges and depositary regimes by mid-2022. Questions around tax and a central bank digital currency are also on the agenda.
Senator Bragg on Crypto Legislation
Earlier speaking at the same event on Monday, Liberal Senator Andrew Bragg had also touched on a proposed Digital Services Act that “would make Australia one of the only jurisdictions taking this issue head-on, signalling that we are in full knowledge of the promise and potential of blockchain technology.”
Senator Bragg recognized the perils of retail investors in the crypto space but warned against government “legislating away risk.”
“I like what [ASIC chairman] Joe Longo said ‘Look if you do your shirt, you do your shirt.’ It’s essential the government does not seek to legalize risk away. I mean, not all risk is bad,” said Senator Bragg.
Investor Advice and Risk
The government’s increasing acceptance of the cryptocurrency sector is occurring as analysts advise retail investors to dial back their allocation to this highly speculative asset.
However, while cryptocurrency seems destined to stick around in some form, portfolio strategist Amy Arnott advises investors limit their exposure at 2% or less for things like Ethereum or Bitcoin.
Regulation is Relatively Welcomed by the Crypto Industry
Addressing the event via video link from the Bahamas, the billionaire chief executive of FTX, the world’s fastest cryptocurrency exchange, Sam Bankman-Fried, spoke of how there are benefits to regulation for a sector that is trying to leave behind the sometimes-fractious relationship it has had with financial watchdogs in the past.
“I think the single most important thing for the industry is having productive dialogue with policymakers and regulators to offer licensed crypto platforms around the world.”
FTX would launch in Australia as soon as this week, after Bankman-Fried was granted an Australian Financial Services License (AESL), he told the room.
FTX is a platform for retail investors to trade cryptocurrency derivatives, and options and futures. It also offers margin lending, allowing traders to borrow up to 20 times their investment.
Big End of Town Talks Crypto
Also sitting before ministers and crypto mavericks were senior executives from the largest banks and payments providers, including Commonwealth Bank and Visa (an old nemesis) who spoke about how their organisations were navigating the crypto economy.
In the next few months, Commonwealth Bank will double the size of the team developing its digital assets, with its CommBank cryptocurrency pilot continuing to add features and users, said Sophie Gilder, the bank's managing director of Blockchain & Digital Assets. It is also concentrated on central bank digital currencies and assets tokenization.
According to data from CBA, more than 900,000 Australians have transferred money to cryptocurrency exchanges in the past two years.
Global payments providers Visa and Square along with a handful of retailer sector heavyweights Netflix, Amazon, Microsoft and PayPal discussed interest from its small business and retail customers for more access to the crypto economy.
“When you have widespread mainstream adoption, you are never going back to the way it was before” Anthony Jones, Head of Innovation, Fintech, Visa Australia
The presentations were made before an audience of several hundred, including senior executives from local exchanges BTC Markets and International Reserve. It was the first day of a weeklong event hosted by Blockchain Australia that is being aired across over 25 countries.
