Australian Parliament to Fast-Track Crypto Regulations

Updated: 30 March 2023

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What – Australia is recognized for its progressive approach to regulating crypto assets.
Why – Senator Andrew Bragg recently presented a private senators’ bill, the Digital Assets (Market Regulation) Bill 2023, to the Australian Parliament.
What Next – The proposed bill suggests regulatory measures for stablecoins, exchange licensing, and custody obligations to safeguard customers and enhance investment in the country’s cryptocurrency market.

The proposed regulation changes will help establish a framework for crypto exchanges, stablecoin issuers, and custody services in Australia. The bill’s primary objective is to protect consumers and increase investments while furnishing authorized deposit-taking entities with guidance on how to report data regarding the issuance and supervision of a digital currency by the central bank.

Senator Bragg gave additional details about the private bill he submitted. He was also critical of the unfulfilled commitment of the current Labor government to the 12 recommendations concerning cryptocurrency regulation, which the Senate Select Committee on Australia suggested as a Technology and Financial Centre in October 2021. He further emphasized that due to the government’s inaction in facilitating regulatory clarity to the sector, native crypto enthusiasts were vulnerable to industry-wide incidents such as the FTX collapse.

Crypto Regulation is a Must: Per Senator Bragg

In various regions, the regulation takes center stage in the cryptocurrency industry. According to Senator Bragg, the Australian government’s failure to provide regulatory transparency for the sector makes it susceptible to industry-wide incidents, such as the FTX collapse. He commented:

“Australia can be a digital asset hub while protecting digital asset consumers. But we must act now.”

The proposed bill comes while the entire industry faces growing scrutiny in Australia and worldwide. In 2021, the Australian Transaction Reports and Analysis Centre (AUSTRAC) filed legal actions against two leading cryptocurrency exchanges, Binance and Coinbase. These exchanges violated anti-money laundering and counter-terrorism financing regulations.

Senator Bragg’s proposed bill requires companies to fulfill different conditions, such as keeping transaction records and adhering to know-your-customer (KYC) and anti-money laundering guidelines.

The proposed bill also outlines different obligations and conditionalities for exchanges, custody services, and stablecoin issuers. These include conditions such as minimum reserve or capital requirements, separation of client funds, reporting on client holdings, auditing, assurance, and disclosure arrangements.

Under the proposed bill, any individual or entity seeking to operate a cryptocurrency exchange, custody service, or stablecoin issuer in Australia must obtain a license from either the Australian Securities and Investments Commission or a foreign license.

In addition to regulating custody obligations, the bill encompasses provisions for overseeing stablecoins. Although ministers commonly initiate regulatory changes in Australia, the Parliamentary Education Office highlights that private members or senators may also submit bills.

Unlike the usual procedure of regulatory changes introduced by Australian ministers, private members or private senators can submit bills, which may take several months or even years to be approved by Parliament. Consequently, it might take a while before the Digital Assets (Market Regulation) Bill 2023 is officially enacted.

At present, there is an ongoing public consultation in Australia regarding the categorization of cryptocurrencies, digital asset tokens, services, and platforms. The consultation paper called “token mapping” was made public in February, providing fundamental definitions for the cryptocurrency industry.

Importantly, Senator Bragg’s proposed bill represents a major milestone in regulating the cryptocurrency sector in Australia. It will help protect crypto users and attract investment in the already expanding market. If the bill is approved, it will join a list of countries that have established a well-defined regulatory structure for cryptocurrency exchanges, custody services, and stablecoin issuers to conduct business in Australia. These countries include European Union, the United States, and Japan.

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