Australian crypto CEOs have cautioned against classifying all digital assets as financial instruments, following recent remarks from Australia’s assistant treasurer on the subject.
In an interview with the Sydney Morning Herald that was published on January 22, Stephen Jones, the Assistant Treasurer and Minister for Financial Services, provided a general summary of the position of crypto regulation in the nation.
His position on Crypto regulation in Australia
He affirmed that the government’s “token mapping” activity this year was in line to identify cryptocurrency assets that would be regulated. The consultation process is to commence soon with the industry, as noted by a crypto exchange executive.
Jones claimed, though, that he was “not that attracted” to creating an entirely new set of rules for what, in his opinion, is fundamentally a financial product. Noting that,
“I don’t want to pre-judge the outcomes of the consultation process we are about to embark on. But I start from the position that if it looks like a duck, walks like a duck and sounds like a duck then it should be treated like one.”
“Other coins or other tokens are being essentially used as a store of value for investment and speculation. There is a good argument that they should be treated like a financial product,” he added.
There are reports that one of Australia’s “Big 4” banks, the Commonwealth Bank, and the Australian Securities and Investments Commission (ASIC) are both in favor of regulating cryptocurrencies as financial products.
Crypto executives caution against a “broad” strategy
Participants in the cryptocurrency market have nevertheless cautioned against taking a broad view of cryptocurrency assets.
Michael Bacina, a Piper Alderman partner and blockchain and digital asset attorney, issued a warning in an interview saying:
“A broad approach of classifying a technology as a financial product without a clear and usable pathway to licensing and compliance will likely send even more crypto businesses offshore and create more risk.”
Also, the general counsel for the domestic cryptocurrency exchange Swyftx, Adam Percy, shared this sentiment saying:
“The trick is to protect consumers without regulating away well-run domestic digital asset businesses and forcing people to use off-shore exchanges subject to less rigorous checks and balances.”
On the other hand, the CEO of a company that offers cryptocurrency on-ramps, Holger Arians, expressed concern that excessive regulation might really harm the leading role that Australia has already been playing in the cryptocurrency industry.
Another caution against adopting an “overly prescriptive approach” to regulation came from Caroline Bowler, CEO of the Australian cryptocurrency exchange BTCMarkets. She noted that it “may put our digital economy on the back foot, in time, smothering our international competitiveness.”
Australian lawmakers see a need to necessitate crypto regulation
Despite the fact that Australian financial authorities have not yet formally developed their regulatory framework, there is now a stronger sense of urgency among Australian lawmakers and their international counterparts following the FTX scandal in November. The FTX crash, according to Jones, “puts beyond doubt” the necessity of crypto regulation.
Australian cryptocurrency investor and entrepreneur Fred Schebesta foresaw potential issues for the sector in September and cautioned against the token mapping being rushed. He continued by noting that Australia’s “fledgling” crypto economy needs to “align with the other major markets and their regulations” since token mapping is complicated.
Blockchain Australia, a crypto lobbying group, agreed at the time, claiming that treating all cryptocurrencies as financial products would hurt investment and innovation in the industry and lead to the loss of jobs associated with the sector.