Australia’s crypto crackdown is taking shape with the government revealing the next steps in its bid to regulate digital currencies.
Treasurer Jim Chalmers wants to bring crypto exchanges and digital asset platforms under existing Australian financial services laws.
The government is also proposing to require platform operators to obtain an Australian financial services license.
Platforms that hold more than $1,500 of an individual’s assets, or $5 million in total, will be covered by the changes.
Minimum standards for digital assets such as tokens are also under review.
Around a quarter of Australians own some sort of crypto asset.
Online platforms hold billions of dollars in assets and expose Australians to significant risks, the proposal document says.
“The collapse of digital asset platforms, both locally and globally, has seen Australians lose their assets or be forced to wait their turn among long lines of creditors,” it says.
“These reforms aim to reduce the risk of such collapses, by raising the level of their operations and strengthening their oversight.”
Dr Chalmers said the Government was acting “decisively and methodically to ensure consumers are properly protected and innovation can flourish”.
The benefits of a central bank digital currency are still being explored in Australia, a senior Reserve Bank official said at the Australian Financial Review’s cryptocurrency summit.
RBA Deputy Governor (Financial System) Brad Jones said the central bank remains “open-minded” to the idea of digital currency and the infrastructure that supports it.
“The important point here is that tokenization offers intriguing possibilities, but is not without challenges and further work is needed to understand how we might generate benefits while managing risks,” he said on Monday.
Several forms of tokenized money, meaning money converted into a digital token on a blockchain, were mentioned in his speech.
Dr Jones said unsecured cryptocurrencies like Bitcoin, which natively use blockchain technology, were “more conducive to speculative investment than serving as a secure settlement instrument”.
“Uncollateralized cryptocurrencies may remain a hotbed of speculative interest, but I find it hard to imagine them playing a significant role in the financial system of the future,” he said.
Of the various forms of tokenized currency being considered, he said only a wholesale central bank digital currency would be “completely free of credit and liquidity risk.”
The RBA has an active research program on the subject and recently launched a central bank digital currency pilot.
The next phase of the research will focus on how different forms of digital currency and infrastructure could support the development of tokenized asset markets in Australia.
The RBA and Treasury will publish a joint report mid next year on the research and set out a roadmap for future work.
