Australia’s New Government Outlines Approach to Crypto Regulation

Key Insights:

• The token mapping exercise formed one of the 12 recommendations in a Senate inquiry report last year.
• The Australian Securities and Investments Commission (ASIC) has found that 44% of citizens own cryptocurrency.
• The goal of the token mapping exercise is to identify how crypto assets and related services should be regulated.

Australia is taking steps to regulate crypto assets in the country three months after the Australian Labor party has been elected into power.

Earlier this year, Anthony Albanese’s Labor Party defeated Prime Minister Scott Morrison’s Liberal-National coalition in the country’s federal election. Following this, there were calls for the government to overhaul the regulatory framework of the largely unregulated crypto sector, with an emphasis on consumer protection.

Token Mapping Exercise

Treasurer Jim Chalmers has announced a token mapping exercise, which formed one of the 12 recommendations in a Senate inquiry report last year.

The token mapping exercise, which is expected to be conducted before the end of this year, will help identify how crypto assets such as Bitcoin (BTC) and related services should be regulated in order to inform future regulatory developments. It will examine the type of crypto asset, their underlying code and any other defining technological features.

Treasurer Chalmers, along with Assistant Treasurer and Minister for Financial Services Stephen Jones and Assistant Minister for Competition, Charities and Treasury, Dr. Andrew Leigh have all expressed how the Albanese-led government wants to produce regulation that will adapt with the “largely unregulated” crypto sector.

Their joint statement also acknowledged that more than one million Australian taxpayers have interacted with the crypto ecosystem since 2018 and yet, “regulation is struggling to keep pace with the crypto asset sector”. The officials attributed this to the previous Liberal-led government.

Overall, the token mapping exercise is aimed at helping regulators and policy makers understand in depth the activities they are looking to regulate while supporting innovation in Australia and protecting consumers.

Regulatory Landscape

This move comes at a time when many in the industry have been calling for regulation of the Australian crypto sector in order to aid companies in developing their own blockchain-based innovations and provide guidance to crypto exchanges.

The Labor government hopes that the token mapping exercise will be an important step to bridge the significant education gap between regulators and policymakers by seeking to uncover the characteristics of all digital asset tokens available in Australia. Other goals include developing a licensing framework, reviewing innovative organisational structures, looking at custody obligations for third-party custodians of crypto assets and providing additional consumer safeguards.

In addition, the Australian Securities and Investments Commission (ASIC) has found that 44% of citizens own cryptocurrency, making it the second most popular investment after shares. Their survey, which gathered data from 1,053 retail investors, also showed how a quarter of investors who hold cryptocurrency say it is their only investment.

ASIC Chairman Joe Longo voiced the Commission’s concerns about the large number of participants in the survey having reported investing in what he described as “volatile crypto asset products”. His views echo the government’s repeated rhetoric of a need for stronger consumer protection when it comes to the crypto investment landscape.