- Australia’s Treasurer, Jim Chalmers, has announced an extensive plan to regulate the nation’s digital assets industry, which would be implemented in Labor’s second term, if they get one.
- The plan would see digital assets platforms, such as crypto exchanges and custody providers, subject to new rules primarily focused on proper protection for investors’ assets.
- The framework would also see changes to the way payment providers are regulated, allowing stablecoins to be treated similarly to more traditional forms of payment.
Treasurer Jim Chalmers has announced a new digital assets framework that will guide development of legislation to govern the industry during Labor’s second term, if re-elected.
The framework, outlined in the Treasury document ‘Statement on Developing an Innovative Australian Digital Asset Industry’ published March 21, will seek to support innovation in Australia’s digital assets industry while also ramping up consumer protections.
A joint statement from the Treasurer, Assistant Treasurer Stephen Jones, and special envoy for cybersecurity and digital resilience Andrew Charlton, provided to Crypto News Australia on Thursday night, said the government wanted to foster the crypto industry’s “innovative ideas”:
We know that digital assets and blockchain represent big opportunities for our economy, financial sector, payments industry and capital markets.
Government statement on digital assets plan
The government plans to release draft legislation for public consultation later this year, assuming it wins reelection.
The Digital Economy Council of Australia (DECA) welcomed the release of the statement and said it was “encouraged” by the government’s efforts to engage the industry and align Australia with international best practice:
We commend the Government’s commitment to supporting innovation, improving risk management capabilities, and addressing critical and ongoing challenges such as de-banking.
Digital Economy Council of Australia (DECA)Related: Crypto Caution: ACCC Chair Flags Risks as Trump Proposes Deregulation
Government Says it Understands Opportunity Presented by Digital Assets
The government said its new framework aims to develop a fit-for-purpose digital asset regime to build a more competitive economy, while also ensuring consumers can safely engage with crypto:
We want to seize these opportunities and encourage innovation at the same time as making sure Australians can use and invest in digital assets safely and securely with appropriate regulation.
Government statement on digital assets plan
The basics of the framework include requirements for digital asset platforms (DAP) — essentially crypto exchanges and custody providers — to meet the same ‘general obligations’ banks and other financial institutions must meet.
The framework will also require that DAPs follow new rules designed to safeguard users’ assets and will implement new requirements around the redemption of ‘stored-value facilities’ (SVFs) such as stablecoins. Additionally the framework will look to mitigate crypto-specific risks by toughening reporting requirements around digital asset issuance and proof-of-reserves.
Under the plan, payment service providers (PSPs) using stablecoins will also be facing a new “comprehensive framework”, with significant reforms to payments licensing. As a result of these changes, stablecoins will be treated very much like more traditional forms of payment.
Exclusions and More Detail on Government’s Plan
Both the new rules around digital asset platforms (DAPs) and payment service providers will leverage the existing regulatory framework provided by Australian Financial Services Licences (AFSL). This means businesses impacted by the new framework would be required to comply with all existing AFSL requirements in addition to the new crypto-specific rules.
A notable exception to licensing requirements will be providers only dealing with “certain stablecoins and wrapped-tokens”, which won’t be required to hold a financial markets license:
Dealing or secondary market trading in these products will be not treated as a dealing activity, and platforms where they are traded will not be treated as operating a market simply because of that trading activity.
Treasury document ‘Statement on Developing an Innovative Australian Digital Asset Industry’
Treasury also clarified that its new (DAP) regime is primarily intended to “mitigate the risks associated with custody arrangements”. As such, it generally won’t apply to crypto businesses not involved in custody.
Activities not covered by this new regime will include:
- Creating non-financial product digital assets;
- Developing software used by others to create or engage with digital assets; and
- Contributing to the maintenance of certain types of digital asset infrastructure.
Small businesses and start-ups below a certain size will also not be subject to “full obligations but may be subject to tailored compliance requirements”.
In addition to the reforms to DAP and PSP regulation, the framework also promises to undertake a comprehensive review of Australia’s Enhanced Regulatory Sandbox and explore ways to “safely unlock the potential benefits of digital asset technology across financial markets and the broader Australian economy”.
Framework Comes as Crypto Poised to Influence Election
The publication of Labor’s digital asset framework comes as polling shows crypto could play an important role in this year’s federal election. Research from YouGov and Swyftx commissioned earlier this year, found that 3.9 million Aussies now hold some form of crypto with 59% of them saying they’ll vote for whichever party is most pro-crypto.
Until now it’s been hard for crypto-focussed voters to decide between the major parties, they’ve both promised ‘fit-for-purpose’ regulation for years now with neither producing much in the way of legislation. Labor’s well articulated plan for regulatory clarity could be just what some crypto voters are looking for to help them decide who gets their vote.
Related: Crypto Lobbying Ramps Up Ahead of Australian Federal Election
Meanwhile, Aussie crypto exchanges have ramped up their political lobbying efforts in a bid to educate lawmakers on the importance of digital assets. Two of Australia’s leading exchanges, Swyftx and BTC Markets, have made financial contributions to both major parties. Coinbase said it plans to — and Kraken reportedly hasn’t contributed financially but it has stepped up its educational efforts.
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