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Highlights
- Morrison government is planning to regulate digital assets, including cryptocurrency and has sought feedback from businesses and individuals on the same.
- The decision has been taken to ensure crypto investors' safety and security, including minimising the risk of fraudulent activities.
- The government seeks to implement most of the reforms by this year's end.
Over the last year, there have been debates on the need to regulate the crypto market by way of legislation. In the latest development, in what may be called the biggest overhaul since the advent of the internet, the Australian government has sought feedback from businesses and individuals on its plan to revamp licensing and custody arrangements for digital assets.
Regulators worldwide are struggling with the expedited emergence of digital assets to strike a balance between spurring technological entrepreneurship while mitigating risks to consumers. In December last year, the Australian Taxation Office said that over 800,000 Aussies had made transactions with digital assets since 2018. There are speculations that PM Scott Morrison-led government is weighing plans for a central bank-issued digital currency, and the Treasury is said to be reviewing plans for a central bank digital currency (CBDC).
As per sources, the proposals that are put on the table for changes include requirements such as breach reporting obligations, adherence with anti-money laundering laws and a strategy to classify crypto assets.
Other proposals that are expected to be considered include:
- A taxation system for cryptocurrency.
- Safeguarding investors from dishonest dealers.
- Ways of regulating digital banks along with crypto exchanges and brokers.
In an address to the Blockchain Week 2022 on Monday, Minister for Digital Economy Jane Hume said that the regime is being developed so that consumers can trust the exchanges they use to buy and sell crypto. She added that the Australian government wants feedback on the regulation prior to its finalisation later this year.
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"We want to promote innovation in crypto assets; innovation creates jobs and growth. There are many innovative use cases for crypto assets, most of which are close to becoming mainstream," Hume said on Monday.
In line with the reforms, the Morrison government is seeking feedback on policies to address banks declining to do business with new fintech companies. The government will study the taxation on these businesses by the end of this year.
As per a report, digital assets contribute approximately AU$2.1 billion to the Australian economy. By the year 2030, their contribution could go up to AU$68.4 billion.
Survey data from 2021 indicated that 25% of Australians owned or had earlier owned cryptocurrencies, thus making Australia one of the biggest cryptocurrency adopting countries on a per capita basis.
Read More: Crypto Catch: Australia moves closer to cryptocurrency regulations
Will Cryptocurrency Regulations Come Into Effect Anytime Soon?
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Meaning of crypto regulation
Australia's move to regulate crypto promises a practical framework to ensure safer transactions as well as investments.
As far as digital coin investors are concerned, Crypto regulation is considered a good thing. Many blockchain experts are of the view that digital coins will have a more stable value once the government comes up with new rules and regulations. Though, this would also mean that it will be subject to taxation. The imposition of tax is one reason why crypto enthusiasts are not advocating cryptocurrency regulation.
However, it should not be forgotten that cryptocurrency will become a legal currency if the government taxes it, adding more to its value. Regulations will also shield crypto investors from fraudulent activities and prevent financial losses.
