An Australian Senate Select Committee has submitted its final report on a year-long review of the country’s approach to crypto and blockchain regulation, seeking to guide, for the first time, a clear framework for the domestic digital assets sector.
The committee on “Australia as a Technology and Financial Centre,” which submitted its initial report in November 2020 and a second in April this year, tabled its third and final report Tuesday. The document outlines problems identified by leading industry participants and includes 12 recommendations for addressing issues as they relate to the lack of crypto and blockchain regulations in the country.
Cryptocurrency and blockchain technology regulation in Australia have often appeared fragmented and haphazard, attempting to apply decades-old laws to the nascent tech.
Taxation of cryptocurrencies for example, while considered capital gains, “unavoidably complicates” the establishment of crypto projects when compared to competing jurisdictions like Singapore that have “favorable income tax laws and do not have CGT,” the committee heard from one witness.
Liberal Party Sen. Andrew Bragg, who chairs the committee and is an outspoken supporter of digital asset innovation and regulation, said Australia would be competitive with Singapore, the U.K., and the U.S. in its approach to crypto and blockchain technology.
“Australia can be a leader in digital assets,” said Bragg. “This means Australians can access new choices and lower prices. It means Australians can have more control of their financial destiny rather than being dependent on endless intermediation.”
Recommendations but not yet law
Recommendations range from the implementation of a licensing regime for crypto exchanges to establishing a custody or depository regime for digital assets with minimum standards under the Treasury portfolio.
The committee also recommends that the Australian government establish a new Decentralized Autonomous Organisation (DAO) company structure.
“AML/CTF regulations and Financial Action Task Force guidelines need to strike a balance between appropriately managing risks, without implementing the travel rule in a way that undermines the operation of legitimate digital asset businesses,” the committee said in its report in relation to DAOs.
The issue of debanking, currently facing local crypto businesses by large banks, was also reviewed and said it understood the difficulty individuals and businesses face by taking their issue public, which, as the committee heard last month, places them on a blacklist against other banks.
Last month, the committee heard several complaints of large financial institutions, including some of the country’s biggest banks, denying or terminating services to local cryptocurrency and remittance businesses.
The committee heard little to no reason had been given for the “debanking” and that banks were being “anti-competitive” because they “didn’t like that there was this competition coming through that bitcoin and other cryptocurrencies posed.”
The committee recommends that the Treasury lead a “policy review” of the viability of a retail Central Bank Digital Currency in the country, in order to curb reliance on the private banking sector.
Having been tabled by the committee, the recommendations are now subject to action in the Senate, where they will be debated further until such time when the debates produce a bill to be voted on in both the lower and upper houses.
To view the full list of the committee’s recommendations, see here.