Federal Treasurer Jim Chalmers has outlined the Albanese government’s approach to regulate Australian crypto assets. Source: Jim Chalmers/Twitter
In a press release published late last week, Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones announced the federal government’s new multi-stage approach to regulate Australian crypto assets and ensure the protection of consumers.
However, the release still does not provide a timeline for when the public can expect to see crypto regulation introduced.
Cryptocurrencies and other similar digital assets have been under particular scrutiny since the collapse of the second largest crypto exchange, FTX, last year.
Many groups and government officials have called for both local and international crypto regulations to be implemented as soon as possible in order to bolster consumer protections and improve consumer confidence.
The stance of the Chalmers and the Albanese government is to address these concerns, while future-proofing the sector and positioning Australia as a potential hub for the growing crypto industry.
“Unsustainable business models used by some companies dealing in crypto assets have left consumers exposed,” says Chalmers and Jones in the joint press release.
“The previous government dabbled in crypto policy but never took the time to future‑proof our regulatory frameworks to protect consumers and guide this new and emerging class of assets.”
The primary elements of the government’s approach are:
- Strengthening enforcement
- Bolstering consumer protection
- Establishing a framework for reform
Strengthening enforcement action
The statement notes that Australian regulators are increasing their focus on crypto asset providers to ensure their obligations are met when dealing with Australian consumers.
“The Australian Securities & Investments Commission (ASIC) is increasing the size of its crypto team and is upping enforcement measures.
“The regulator will take legal action where it identifies crypto offerings being marketed without the appropriate credit or financial services licence.
“ASIC will pay particular attention to ensuring that risks to consumers are appropriately disclosed.
“The Australian Competition and Consumer Commission (ACCC) is also stepping‑up efforts to prevent scams, including those involving crypto assets.
“The Government’s National Anti‑Scams Centre, located within the ACCC, will facilitate real‑time data sharing and the coordinated prevention and disruption of scams.”
Chalmers notes that the ACCC’s Scamwatch reported a continuing increase in scammers that demand payment in cryptocurrency. Reported losses via this payment method totalled $221 million in 2022 — a 162 per cent increase over the year prior.
Bolstering consumer protection
The Albanese government plans to reform the licensing and custody of crypto assets, particularly those assets that fall outside of the current regulatory framework for financial services.
“We will establish a set of obligations and operational standards for crypto asset service providers to ensure they adequately safe‑keep assets for customers.
“This will ensure consumers are protected from avoidable business failures or from the misuse of their assets by service providers.
“Consultation on the design of a custody and licensing framework will begin in mid‑2023 to allow for sufficient consultation prior to the introduction of legislation.”
Establishing a framework for reform
“While immediate action is being taken now to protect consumers, additional work needs to be done in order to understand the risks and opportunities crypto poses for the future.
“This begins with Treasury’s token mapping exercise.
“A consultation paper released today explores in detail which elements of the crypto ecosystem are sufficiently regulated and which require additional attention.
“This will enable the Government and stakeholders to focus on regulatory gaps and ensure that emerging risks are identified and controlled.”
The Treasury’s token mapping exercise has been in progress since August 2022.
The full press release can be read here.
