Australian Senate Committee Calls for New Rules for Crypto

The committee wants regulations that will make the country more competitive in the crypto industry with other jurisdictions.

Oct 21, 2021 at 1:29 a.m. UTC
Updated Oct 22, 2021 at 2:44 p.m. UTC

An Australian Senate committee has recommended a set of new rules to establish a clear framework for the country’s digital assets sector.

The committee on “Australia as a Technology and Financial Centre,” which submitted its initial report on the topic last November and a second in April this year, presented its third and final report Tuesday. The document outlines problems identified by leading industry participants and includes 12 recommendations to address the lack of crypto and blockchain regulations in the country.

Cryptocurrency and blockchain technology regulation in Australia has often appeared fragmented and haphazard with decades-old laws covering the new technology.

One witness told the committee that taxing profits on crypto transactions as a capital gain “unavoidably complicates” the establishment of crypto projects, compared with jurisdictions like Singapore that have “favorable income tax laws and do not have CGT (capital gains tax).”

Sen. Andrew Bragg, the committee’s chairman, said Australia can be competitive in crypto.

“Australia can be a leader in digital assets,” he said. “This means Australians can access new choices and lower prices. It means Australians can have more control of their financial destiny rather than being dependent on endless intermediation.”

Recommendations but not yet law

The committee recommended implementing a new licensing regime for crypto exchanges and establishing a custody or depository regulatory framework for digital assets.

The committee also recommended that the Australian government set up rules for companies that have the new decentralized autonomous organization (DAO) structure.

“AML/CTF regulations and Financial Action Task Force guidelines need to strike a balance between appropriately managing risks, without implementing the travel rule in a way that undermines the operation of legitimate digital asset businesses,” the committee said in its report in relation to DAOs, referring to anti-money-laundering (AML) rules and countering terrorism financing (CFT). The travel rule refers to a requirement that virtual asset service providers such as crypto exchanges disclose information about their customers. The rule was established by the global Financial Action Task Force.

The committee also addressed the issue of “debanking,” or banks refusing their services to local crypto and remittance customers. Last month, the committee heard several complaints about that.

The committee is recommending the country’s Treasury lead a “policy review” of the viability of a retail central bank digital currency in the country in order to curb reliance on the private banking sector.

The recommendations now go to the Senate, where they will be debated until it drafts a bill. The Senate and the House of Representatives would then vote on the bill.

To view the full list of the committee’s recommendations, see here.




DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Sebastian Sinclair is a CoinDesk news reporter based in Australia.