Australia’s Treasury Ministers have today announced consultation on a framework for regulation of the crypto asset sector for industry and regulators. The reform agenda will aim to improve the way Australia’s regulatory system manages crypto assets, embracing new and innovative technologies whilst protecting consumers.
This broad consultation will focus on what is in the ecosystem, what risks need to be examined, and how these assets and related services should be regulated.
Treasury’s consultation
Broadly, the Government’s reforms will seek to:
- identify notable gaps in the regulatory framework;
- progress work on a licensing framework;
- review innovative organisational structures;
- examine custody obligations for third party custodians; and
- provide additional consumer safeguards.
The first step will involve conducting a ‘token mapping’ exercise to help identify what is being regulated.
This expands on the previous government’s consideration of certain crypto asset secondary service providers. Details of this earlier consultation are available here.
ASIC update
ASIC has also identified crypto assets as a core strategic project for the next year of its 2022-26 Corporate Plan. Volatility in crypto asset markets are noted amongst other things, including climate risk, as having a “transformational impact”.
As part of this strategic plan, ASIC’s actions will include:
- supporting the development of an effective regulatory framework focused on consumer protection and market integrity;
- taking action to protect investors from harms posed by crypto-assets and decentralised finance that fall within its remit; and
- supervising and assessing product disclosure statements and target market determinations of major crypto offerings.
Announcements in context
These announcements follow the Consultation Guide from the Board of Taxation which was published on 18 August 2022 detailing consultation on the taxation of crypto assets. Further details are available in the KWM alert available here.
It also follows other recent announcements from APRA and the Council of Financial Regulators (in both March and June statements) concerning prudential treatment of bank exposures to crypto-assets and stablecoins. The former is likely to follow the outcomes of consultation being undertaken by the Basel Committee, whilst the latter may be incorporated into the proposed framework for regulating stored value facilities following Treasury’s review of the Australian Payments System.
If you have any questions in relation to these future developments or the current regulation of crypto assets, please reach out to your KWM contacts.
