Minister for Digital Economy Jane Hume has announced the Australian government will “let Australians invest in crypto assets safely and securely” by establishing a market licence regime for crypto exchanges.
Hume outlined that the regime, which is set to be released as part of a policy paper on Monday afternoon, is the government’s signal for Australians that they can trust the crypto services in which they interact with as Australian crypto businesses will receive verification in the form of an “Australian-made badge of approval”.
“The Morrison government wants to make sure that consumers can trust the exchanges that they use to buy crypto,” Hume said speaking at Blockchain Australia event on Monday.
“Crypto values will go up and down sure as eggs and the government will not be protecting consumers from market volatility — and nor should they. But Australian investors will be sure that if they use a licenced Australian exchange that they can trust that exchange will deliver on its commitments to customers and have appropriate protections.
“This will be a uniquely Australian stamp of quality. The healthy heart tick of approval for your crypto exchanges.”
Additionally, the federal government is introducing custody arrangements for crypto exchanges.
“We have a plan to ensure that crypto investors who hold crypto on an exchange can always access their money by introducing custody requirements for crypto assets,” Hume said.
Read also: Cryptocurrency investments are growing. But banks and regulators are taking a cautious approach
According to Hume, the government’s role in helping Australia’s crypto industry grow is to assure there is “trust” between the crypto investor and exchange.
“Many commentators have called for us to shoehorn crypto into the financial products regime, but crypto assets don’t necessarily require the government to assure trust in the same way that financial products do,” she said.
“There’s a lot more transparency. There are more fewer things that can go wrong. Crypto assets don’t generate the same potential harms as financial products, so we won’t regulate them in the same way … However, once you introduce an intermediary, like an exchange or an interaction with the physical or non-crypto world, then you introduce that trust requirement … the role of government is to help assure this trust and that’s why the Coalition is regulating licensees and custodians.”
The introduction of the policies is ahead of the federal election that is slated to take place in the next couple of months.
“Pioneering legislation to deliver our custody and exchange proposals outlined today will be a top priority in the Coalition’s next term of government,” Hume claimed.
She also hinted that if a Labor government was to win, the Opposition would “have a shopping list of legislative priorities” but a “light touch regulatory framework for the crypto industry isn’t on it”.
Also on Monday at the event, Australian Liberal Senator Andrew Bragg recommended that a Digital Services Act should be established so that Australia’s “ambition” to become a so-called crypto hub is not undermined.
Bragg said a “very simple, clear, and clean” Digital Services Act would “show that Australia is open for business”.
He envisions the Digital Services Act would be guided by four key principles: Technology neutrality; broad flexible principles on unprescribed code; regulation by minister rather than bureaucratic agencies; and within government, having the cooperation and appropriate powers, resourcing, and personnel.
At the same time, he said establishing the Digital Services Act would avoid regulation governing blockchain being bundled into the Corporations Act, “which is a very lengthy and sometimes confusing piece of law … that many of our lawyers would find it almost unreadable in parts”.
During his speech, Bragg also insisted Australia’s tax regulation needs reforming, highlighting that the lack of changes would mean Australia cannot be a serious crypto hub.
“You can have the best regulation in the world, but if you are not tax uncompetitive then it is not going to work,” he said.
He continued saying that Australia should look to the Isle of Man or the Bahamas or “any of these tax havens for inspiration on regulation”.
“[It] doesn’t mean that you have to copy the tax policies. It is a balance of having a dynamic regulatory environment, but also being prepared to have a tax system which is going to be competitive,” Bragg said.
“And people like me will have to make the case in the public square that a tax cut in this space is appropriate if it is going to ensure that there’s going to be more people doing business in this country and employing more Australians.
“I’m not afraid of arguing for radical tax changes to ensure that we are not inadvertently taxing transactions that we shouldn’t be. But better still, trying to get a system where we are becoming viewed as a jurisdiction that people want to do business in because our tax system is clear and clean, just as our regulatory environment is clear and clean.”
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