In a positive sign for the local crypto industry, a Senate committee has put forward an all-encompassing plan for Australia to lead the way globally with light-touch, innovation-fostering regulations.
Led by Liberal Senator Andrew Bragg, the Senate Committee on Australia as a Technology and Financial Centre (ATFC) today tabled its third and final report in Parliament. And the 156-page document includes 12 specific recommendations that broadly represent a massive vote of confidence in the industry’s future.
We’ll get to those recommendation specifics in a moment, but first, let’s hear what Blockchain Australia CEO Steve Vallas had to say on it all. In a Twitter chat with Stockhead, the peak industry body leader said:
“Today Australia staked its claim for a leadership role in the development of a fit-for-purpose regulatory framework for digital assets. It’s a framework that builds upon our reputation as an open, forward thinking economy.”
Vallas, and many others in the Australian crypto and blockchain landscape have been pushing for official regulatory clarity for some time, certainly much of the past 12 months.
“It’s important [for Australia] to point the way,” Vallas added. “Now. We. Run.”
The 12 steps to regulatory clarity for crypto down under
The key takeaways from the Senate report include recommendations that propose an overhaul of capital gains tax on decentralised finance (DeFi) activities, new licences for crypto exchanges, new laws related to decentralised autonomous organisations (DAOs) and a tax discount for crypto miners using renewable energy.
It’s a starkly different approach from what we’ve seen from US regulators and policy-makers so far. Despite the approval of a US Bitcoin futures ETF this week, a fair bit of fear, uncertainty and doubt still surrounds the regulatory approach to crypto within the world’s biggest economy.
In the meantime, though, as Steve Vallas and Senator Bragg note, Australia has the opportunity to show the way. Very basically, this is what’s being proposed by the Senate Select Committee. (One of our favourites is recommendation 6…)
- Establish a market licensing regime for digital currency exchanges.
- Establish a custody or depository regime for digital assets in the Treasury portfolio.
- Conduct a “token mapping” exercise to characterise various types of crypto tokens.
- Create a new decentralised autonomous organisation (DAO) company structure.
- Clarify AML (Anti-Money Laundering) regulations to ensure they are fit for purpose and do not undermine innovation.
- Amend the capital gains tax regime so that digital-asset transactions only incur CGT when they result in a clearly definable capital gain or loss.
- Amend laws so digital-asset miners receive a company-tax discount of 10 per cent if they use their own renewable energy.
- Have Treasury lead a policy review of the viability of a retail central bank digital currency (CBDC) in Australia.
- Through the Council of Financial Regulators, implement a scheme to address the due diligence requirements of banks by June 2022.
- Develop a clear process for businesses that have been de-banked, anchored around the Australian Financial Complaints Authority.
- Encourage the Reserve Bank of Australia to develop common access requirements for the New Payments Platform.
- Establish a global markets incentive to replace the offshore banking unit regime by the end of 2022.
‘Confidence is built on clarity’
As previously reported by Stockhead, the Senate committee has been hearing from a broad range of experts and industry players in the process of building its report. Some of these include Blockchain Australia’s Steve Vallas, leading exchanges such as BTC Markets and CoinJar, and Chloe White, managing director of the policy advisory board Genesis Block.
“Today is a watershed day for the digital assets sector in Australia,” wrote Blockchain Australia in its news release on the report.
And “confidence is built on clarity,” Vallas told Stockhead. “The implications of the cryptocurrency and digital assets sector require government, regulators and industry to work together to share knowledge and capability. It also requires a willingness to lean in on what’s to come. This report seeks to do both.
“It addresses the need for greater consumer protections while encouraging investment in the sector. A token-mapping exercise, development of a licensing regime coupled with a recommendation that DAOs are recognised strike that balance.”
Senator Bragg, meanwhile, said the proposed regulations would help Australia to become a leader in digital assets:
“The committee has recommended a comprehensive crypto framework to deliver Australian leadership. We’ll be competitive with Singapore, the UK. and the US. This will drive investment and jobs into Australia.”