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Following recent statements made by an Australian assistant treasurer on the matter, cryptocurrency executives in Australia have warned against grouping all digital assets into the same category as financial goods. They say this is especially important given recent regulatory developments.
In an interview with the Sydney Morning Herald published on 22 January 2018, Assistant Treasurer and Minister of Financial Services Stephen Jones provided an outline of the country’s current position on cryptocurrency law.
According to cryptocurrency exchange executives, he confirmed the government was on track with a “token mapping” exercise it conducted this year to determine which crypto assets should be regulated. He also stated that an “immediate start” consultation process with the industry was planned. Jones, on the other hand, said he was “not that keen” on the idea of passing an entirely new set of laws for something that, in his opinion, functions primarily as a financial product. “I don’t want to make assumptions about the outcome of our feedback gathering process.
But I started from the premise that if something walks like a duck, quacks like a duck, and looks like a duck, then it should be treated as if it were a duck,” said Jones.
“Other currencies and tokens are essentially used as a kind of store of value to engage in financial speculation and investments. There are strong reasons to treat them the same way as financial instruments.”
According to the Sydney Morning Herald (SMH), the Australian Securities and Investments Commission (ASIC) and Commonwealth Bank, one of Australia’s “Big 4” banks, both support regulating cryptocurrencies as financial products. ASIC is Australia’s financial regulator. Commonwealth Bank is one of the four largest banks in Australia. However, players in the cryptocurrency sector have warned against taking an all-encompassing approach to cryptocurrencies and their assets.
“The trick is protecting consumers without regulating well-managed domestic digital asset businesses and forcing people to use offshore exchanges with less stringent checks and balances,” he concluded. The phrase “the trick is to protect consumers without regulating well-managed domestic digital asset businesses” closed the loop. Meanwhile, the Chief Executive Officer of a company that provides on-ramp cryptocurrencies, named Holger Arians, expressed concern that over-regulation might be “severely detrimental” to the pioneering role Australia is playing in the cryptocurrency industry.
An “too prescriptive approach” to regulation is something to be avoided, according to Caroline Bowler, CEO of Australian cryptocurrency exchange BTCMarkets. Because of this, our digital economy may lag behind in the future, which will stifle our ability to compete internationally.
In light of the FTX debacle in November, Australian MPs and their colleagues around the world feel an even greater urgency to act. However, Australian financial authorities have yet to publicly formulate their regulatory framework.
According to Jones, FTX’s failure “obliterates the question” of the need for cryptocurrency regulation.
Fred Schebesta, an Australian entrepreneur and investor in the cryptocurrency space, issued a warning in September that speeding up the token mapping process may be harmful to businesses.
The complexities of token mapping are not fully understood, and it is critical for the “newborn” Australian cryptocurrency economy to “align with other major markets and their laws,” as he further explains.
Cryptocurrency advocacy organization Blockchain Australia shared this sentiment, claiming at the time that if all crypto assets were considered financial products, it would hurt the investment and innovation of the cryptocurrency sector and lead to loss of business-related jobs.
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