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The Albanese government has said it will ramp up regulation of cryptocurrency and trading and establish a set of obligations and standards for crypto asset service providers.
The federal government has announced plans to heighten oversight of the crypto trading industry amid concern over the impact of “unsustainable business models” on consumers.
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The government’s new “multi-stage approach” aims to:
- Strengthen enforcement
- Bolster consumer protection
- Establish a framework for reform
As part of the first stage, the Australian Securities and Investments Commission (ASIC) will be tasked with expanding the size of its crypto team to build enforcement capacity.
This will involve launching legal action against crypto dealers suspected of marketing their products or services without appropriate credit or financial services licences.
ASIC’s primary remit would be to ensure risks of crypto were properly disclosed to consumers.
Meanwhile, the Australian Competition and Consumer Commission (ACCC) will be responsible for “stepping up efforts” to prevent crypto scams.
Specifically, the federal government’s National Anti‑Scams Centre, managed by the ACCC, will facilitate “real‑time data sharing” and the “coordinated prevention and disruption of scams”.
This comes after the ACCC’s Scamwatch report found more scammers were seeking payment via crypto with losses reported via cryptocurrency exchange totalling $221 million in 2022 — a 162 per cent increase year-on-year.
AUSTRAC, which monitors crypto exchanges under the Anti-Money Laundering and Counter Terrorism Financing Act, is also expected to support efforts to strengthen oversight.
Enhanced enforcement and oversight would pave the way for a new legislative framework with the government unveiling plans to reform the licensing and custody of crypto assets.
Prospective reforms would particularly target the subset of crypto assets, which were currently not subject to the financial services regulatory framework.
The future framework was expected to include new obligations and operational standards for crypto asset service providers aimed at ensuring they “adequately safe‑keep assets for customers” particularly in the event of business failures.
The government is slated to commence consultation on the design of a custody and licensing framework in mid‑2023.
Treasury’s token mapping exercise, announced in August 2022, is expected to provide guidance ahead of the formalisation of future reforms.
A consultation paper was published on Friday (3 February) with an overview of the crypto ecosystem — noting elements of the sector that require additional regulatory attention.
These include:
- ‘Intermediated token systems’ — involving intermediaries issuing crypto assets and providing crypto asset services
- Anonymous crypto transactions between users, which may involve the creation of financial or non-financial crypto assets that are “fundamentally different” to intermediated counterparts
“The Albanese Government is committed to working methodically with regulators, industry, and consumer and business advocacy groups to get the policy settings right to protect consumers and support innovation in this emerging sector,” Treasurer Jim Chalmers said on Friday (3 February).
“The previous government dabbled in crypto policy but never took the time to future‑proof our regulatory frameworks to protect consumers and guide this new and emerging class of assets.
“We are acting swiftly and methodically to ensure that consumers are adequately protected and true innovation can flourish.”
Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, told ABC News Breakfast that there was a threefold reason for regulating crypto.
He said: “Over a million Australians have invested in cryptocurrency, most of them dabbling in it for investment purposes, not so much used as a means of exchange.
“We want to ensure that Australians who are investing in or using cryptocurrency can do so safely.
“We want to ensure that the system is stable and that any problems in the cryptocurrency area doesn’t flow over into other areas of our financial markets.
“And, thirdly, we want to ensure that cryptocurrency is not an easy avenue for international criminals to use it to hide their nefarious activities. So protecting consumers, protecting our financial system and cracking down on criminals."
[Related: Fringe lending practices in ASIC’s sights]
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