Australian Legislators Propose Changes to Crypto Bill After Review

Australia’s Senate Committee on Economics Legislation has wrapped up its review of the “Digital Assets (Market Regulation) Bill 2023,” originally introduced by Senator Andrew Bragg.

Released on September 4, the committee’s report calls for specific amendments to the draft bill, representing a cautious yet significant move toward the comprehensive regulation of digital assets in Australia.

One key amendment focuses on how regulated digital assets are defined. The committee suggested that non-fungible tokens (NFTs) be excluded from this category. This distinction is important, as NFTs possess unique characteristics that set them apart from cryptocurrencies like Bitcoin and Ethereum.

Additionally, the committee recommended clarifying the classification of stablecoins, proposing that asset-backed tokens, such as those linked to gold and silver or carbon credits, should not be considered stablecoins. These tokens, tied to physical assets, pose different risk factors compared to traditional stablecoins that are pegged to fiat currencies.

Another suggestion was to extend the transition period for enforcing the new regulations from three months to nine months. This extension aims to give stakeholders ample time to adjust to the newly established regulatory framework.

The committee also focused on the tax implications related to digital asset transactions. They called on the Board of Taxation to conduct a comprehensive review of how digital assets are taxed, with the goal of introducing relevant legislation by early 2024.

The issue of debanking, or the exclusion of cryptocurrency firms from conventional banking services, was also addressed. The committee urged the implementation of recommendations proposed by the Council of Financial Regulators. There are concerns that debanking could push the crypto industry into unregulated areas, resulting in unintended consequences. This risk had already been acknowledged by the Australian Department of the Treasury.

The report emphasized that the absence of strong regulation in the digital asset sector has negatively affected Australian consumers and investments. According to the Senate, Senator Bragg’s bill signifies “the first serious step towards implementing a comprehensive digital asset regulatory framework.” It further criticized the current government for abandoning the more ambitious crypto plans of the previous administration, suggesting that Australians would ultimately bear the consequences.

Originally, the report was expected by August 2, but the committee requested multiple extensions—first to August 16, then to August 25, finally releasing the report on September 4. This delay reflects a cautious and thorough approach to the complex issue of digital asset regulation in Australia.

Through these amendments and recommendations, the committee aims to strike a balance between consumer protection and fostering innovation, paving the way for a more regulated and secure digital asset ecosystem in Australia.