Peak blockchain industry body, Blockchain Australia, has suggested crypto asset regulations in the country need updating with a “fit-for-purpose” approach to help foster growth and innovation, as well as provide greater protection for consumers.

According to a paper released on its website on Friday, the peak body has written to the Senate Select Committee on Australia as a Technology and Financial Centre, calling for a “graduated and coordinated” approach to the regulation of digital assets.

This comes on the back of encouraging activity from the Senate committee, which has been calling for submissions from industry players on how to improve Australia’s standing as a “technology and financial” hub.

Blockchain Australia has made four core recommendations in detail to the committee, but here is an overview of what they’d like to see:

• Building on and strengthening consumer protections.
• Facilitating consultative cooperation between industry and government.
• Providing a safe harbour to create short-term certainty for businesses.
• Proposing a best practice financial advice approach modelled on the existing AFSL (Australian Financial Services Licence) regime.

The industry body has submitted proposals to the committee before and, in this latest paper, commended the committee’s open approach so far, stating:

“The Committee recognised in the second interim report [in March 2021] that regulatory uncertainty remains an issue that is inhibiting the widespread uptake of blockchain and distributed ledger technology.”

The Blockchain Australia paper did, however, make the point that crypto-industry education is sorely lacking in Australia and that “considered and consistent industry consultation has been largely absent notwithstanding recent efforts on the part of regulators to redress these shortcomings.”

The body is urging regulators to consult closely with Australia’s blockchain industry to better understand the technology and opportunities, commercial and otherwise, it can provide the country.

Just need a little time… and understanding

Blockchain Australia also recommends there should be an appropriate amount of time for crypto asset providers to react to any legislative procedure: “Any legislation should contain an appropriate transition period and not apply retrospectively,” the paper reads.

The paper draws close attention to derivatives trading, too, and the need for regulatory bodies to make some distinction between crypto and traditional derivatives.

Crypto derivatives are “fundamentally different”, says Blockchain Australia. “Australia’s regulatory framework does not take into account such products.”

The peak body argues that the current set of rules for traditional derivatives trading, including custody, clearing and settlement rules and trading halts, are not appropriate for the crypto derivatives market.

Given the fast-moving, constantly evolving nature of blockchain development worldwide, Blockchain Australia is, above all, seeking flexibility for the industry from regulators.  In its view, this will help the sector adapt with agility and “allow Australian entrepreneurs to innovate in ways that are currently unknown”.

Demand for crypto assets in Australia is increasing, noted the industry body. A survey by comparison site Finder shows that 25 per cent of Australians either own, or plan to own, cryptocurrency by the end of 2021.

The Senate committee is still taking submissions of recommendations and is planning to deliver a final report, presenting its own views and recommendations, before the end of October this year.