Regulation
Cryptocurrency Regulation in Australia in 2024 – Forbes Advisor Australia
Steve Vallas, managing director of Blockchain APAC and technology advisor at Skafold Global, says the 2023 token mapping may have shaped the regulatory perimeter by helping to legally define digital assets and whether they are financial products.
“For example, the token mapping exercise could (would) have provided guidance to exchanges and industry stakeholders on what factors and characteristics create or exclude obligations applicable to financial products,” Vallas says.
“Effectively facilitating a further opportunity to determine whether legal classification is appropriate given the type of product, its risk and how it is likely to develop or be reconstituted.”
Global leader of Norton Rose Fulbright’s digital transformation division, Nick Abrahams, agrees with the government’s current priorities, arguing there is too much unregulated trading in Australia.
“A lot of them are below scale. These exchanges pose a significant risk to Australians, particularly those who store their cryptocurrencies on the exchange. If the exchange is compromised by fraud, a hacker attack or a liquidity shortage, many Australians will lose their money.”
Abrahams says token mapping would help distinguish cryptocurrency investments from the more innocuous use of digital tokens, such as for big brands’ marketing and loyalty programs.
“We need to quickly move to a situation where it is clear which tokens are unregulated and which are regulated. Not all tokens need to be regulated.”
This view was echoed by Stephen Jones in his speech in which he outlined the government’s regulatory position.
“We have taken into account industry feedback on our token mapping document, which has helped us refine and clarify where regulation should focus first,” he said at the time.
“Not every token in every scenario requires regulatory oversight. Instead, the focus of our proposed regulation will be the entities that hold Australia’s digital tokens on their behalf: cryptocurrency exchanges and other digital asset platforms.”
Loretta Joseph, global authority on digital asset regulation and advisor to McDonell Nadeau, said that in addition to “proper custody rules”, the turmoil created by the collapse of FTX highlighted the urgent need for basic compliance clarity for the cryptocurrency industry.
“The FTX collapse demonstrated that things like reporting, governance, treasury management – whether it’s a crypto asset or whether it’s a stock or a fixed income asset – these things need to have controls and the appropriate balances put in place by these companies.”
Joseph participated in a discussion on global standards for virtual assets held at the 17th G20 in Bali: he said progress was being made in global alignment and that Australia did not need to reinvent the wheel.
“We are dealing with an industry that is global in nature. I think all jurisdictions should take note of global standards and work based on those frameworks,” says Joseph.
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