Senator Bragg says the industry has voiced strong support for ‘beefed up’ requirements for an Australian crypto market license
Senator Andrew Bragg, the liberal leader driving Australia’s digital technology transformation says the industry has voiced its support for “heavily beefed up requirements for an Australian crypto market licence.”
Bragg told the APAC Blockchain conference on Wednesday cryptocurrency exchanges could face capital adequacy rules and their managers would be subjected to “fit and proper person” tests, following discussions with industry last month.
These changes would potentially trigger a wave of consolidation in the unregulated industry while boosting investor protections.
The senator’s update on the path toward regulation comes nearly a year after the Senate Select Committee on Financial Technology and Regulatory Technology launched, with a suite of detailed recommendations handed down in November last year.
Bragg, who helmed the Senate committee, said consultation with industry pointed to a consensus that crypto exchanges should be subjected to “core standards for capital adequacy, risk management, auditing and responsible person tests”.
“The legal principles which apply to financial markets can, and will, apply to digital markets,” Bragg said.
The statements coincide with the release of a paper on Tuesday warning of the cybersecurity and cyber crime implications of cryptocurrency by the Cyber Security Industry Advisory Committee.
The statements around tougher regulation by Bragg also follow increased local scrutiny following the collapse of the Australian-based digital currency exchange MyCryptoWallet in December.
That same month both the Australian Federal Police and the ACCC said they were ramping up their resources to chase scams and exploitation in the space.
Joe Longo, chair of ASIC said in November of the burgeoning sector that “the policy and regulatory challenges are very significant”
There are some difficult policy questions to be answered. They have to be answered, frankly, by the Government,” Longo said, adding that currently “investors are on their own.”
But the government has maintained the potential benefits outweigh any risks.
A report released by EY in November found the cryptocurrency sector contributed $2.1 billion to the Australian economy and employs around 11,600 people.
It also suggested Australia’s crypto industry could outgrow the energy and tourism sectors by 2030.
Jonathon Miller, managing director for Kraken Australia, said despite delays Australia has built a reputation for being a crypto savvy and friendly jurisdiction, which had ensured crypto businesses stayed in Australia.
“This is something that the ‘traditional’ technology businesses of Australia have struggled to do,” Miller said.
But onerous regulation such as market licensing and/or crypto asset custody/deposit regime could “risk driving these innovative businesses offshore, repeating the mistakes of the past when it comes to encouraging local innovative businesses onshore.”
Ian Lowe, chief executive of crypto wealth management platform Dacxi said while regulation of the sector is already taking place, “what’s really needed is a drive on public education.”
“Digital assets are fundamentally different from their traditional counterparts,” he said.
Read the full article: https://www.businessinsider.com.au/senator-bragg-speech-industry-support-for-crypto-regulation
