Australian Elections and Crypto Regulation
In the wake of the recent Australian elections, the cryptocurrency sector is urging the reelected Labor government to prioritize the development and implementation of digital asset legislation to keep pace with the evolving global market. The Labor Party achieved a significant victory on May 3, securing 54.9% of the two-party-preferred vote, compared to 45.1% for the Liberal and National coalition.
While both major parties vowed to reform crypto regulations during their campaigns, it was the opposition that committed to introducing draft legislation within the first 100 days of their term.
Industry Perspectives
Joy Lam, the head of global regulatory and APAC legal at Binance, emphasized the need for immediate action, recalling discussions that have been ongoing for several years. She voiced her concern that timely regulatory changes are essential for the sector’s growth.
“Timing is really quite critical now because obviously it’s something that has been discussed and kicked around for quite a few years,”
she told Cointelegraph.
Coinbase’s managing director for APAC, John O’Loghlen, echoed these sentiments, stating that the Albanese Government has both the opportunity and obligation to act swiftly. He proposed the formation of a Crypto-Asset Taskforce within the government’s first 100 days to expedite the introduction of regulations that safeguard consumers, foster innovation, and prevent talent and capital from fleeing to other jurisdictions.
According to Caroline Bowler, CEO of BTC Markets, the election outcome creates a favorable environment for advancing Australia’s regulatory stance on digital assets.
Regulatory Developments and Concerns
Amid ongoing global regulatory developments, such as the UK releasing its draft regulations and stablecoin bills progressing in the U.S., Lam noted that Australia is at risk of lagging further behind. She pointed out that the Treasury is expected to release draft legislation on the regulation of digital asset platforms and modernizing payment systems by June, but she expressed skepticism regarding adherence to this timeline.
Critics have pointed out that the Labor government has not taken substantial action on crypto regulation in its initial term, yet there are claims that this delay may have allowed for a more measured response than one that could have mirrored the stringent policies seen under President Biden’s administration in the U.S.
Notably, since preliminary consultations surfaced at the end of 2023, the government’s stance appears to have evolved positively, culminating in the March release of a document titled “Statement on Developing an Innovative Australian Digital Asset Industry.” This statement outlines critical priorities, including the utilization of the existing Australian Financial Services Licence (AFSL) framework to govern digital asset platforms and payment stablecoins. The strategy places emphasis on ensuring the secure custody of client assets by centralized entities while intentionally avoiding controversies related to decentralized finance.
Lam applauded the adoption of the AFSL regime, remarking that it is a well-understood system that simplifies regulatory processes.
Future Prospects
Additionally, the government intends to evaluate the Enhanced Regulatory Sandbox, designed to allow emerging digital asset businesses to operate with minimal regulatory burdens. There are also discussions surrounding the concept of tokenization. Lam noted the government’s responsiveness to industry feedback throughout 2023, suggesting a genuine effort to adapt to the rapidly changing global landscape and learn from the experiences of other jurisdictions.
Dea Markovy, policy director at Fireblocks, indicated that significant foundational work has been completed, projecting a generally positive outlook for the new regulatory approach. While further details are expected about Australia’s Digital Asset Platforms regime, Markovy highlighted the government’s initiative to simplify the complex licensing framework for crypto intermediaries. Additionally, the Australian Securities and Investments Commission (ASIC) released its own regulatory proposals for crypto in December, which will shape the forthcoming legislation.
These regulatory changes also aim to address issues related to debanking, with Lam asserting that a solid regulatory framework would alleviate such challenges. She emphasized that a clear licensing structure would mitigate risks and provide banks with the reassurance they require, and hinted at the need for supplementary guidance for banking institutions.
