A Senate committee in Australia has made 12 recommendations for the crypto regulations and a series of new laws to create a unified regulatory framework for the country’s digital assets industry.
In Australia, governance of cryptocurrency & blockchain technology has sometimes seemed scattered and chaotic, with decades-old legislation governing the new technology.
According to one witness, taxing cryptocurrency revenues as capital gains “unavoidably complicates” the development of crypto enterprises, in comparison to places such as Singapore, which has “favourable income tax regulations and no CGT (capital gains tax).”
“Australia has the potential to be a world leader in digital assets,” he added. “This implies that Australians will have access to new products and services at reduced rates. This implies that Australians may regain knowledge about financial futures rather than being reliant on perpetual intermediation.”
Recommendations Not Yet Fixed Rules
The committee proposed developing a new licencing system for cryptocurrency exchanges & establishing a legal approach to digital asset custody or depository.
“AML/CTF regulations & Financial Action Task Force guidance must strike a balance between risk management and undermining the operation of valid digital asset businesses,” the committee stated in its report on DAOs, referring to anti-money laundering (AML) and counter-terrorism financing (CTF) regulations (CFT). The travel rule relates to a need for virtual asset providers, such as cryptocurrency exchanges, to reveal client information. The worldwide Financial Action Task Force formulated the guideline.
Additionally, the committee discussed “debanking,” or banks refusing to serve local cryptocurrency and remittance consumers. The committee received multiple concerns about this last month.
The committee recommends that the country’s Treasury conduct a “policy evaluation” of the feasibility of a consumer central bank for digital money in order to reduce dependency on the private banking industry.
The Senate will now debate the suggestions until a bill is drafted. The bill would next be voted on by the Senate & the House of Representatives.
Here are details of the recommendations proposed by Austrlian Governament.
- The committee recommends that the Australian Government create a market licensing system for Digital Exchange Rates, which would include capital adequacy, auditing, and responsible person criteria, under the Treasury ministry.
- The committee also proposes that the Australian Government create a minimum-standards-based custody or depository framework for digital assets underneath the Treasury portfolio.
- The committee also proposes that the Australian Government, via Treasury and in consultation with other relevant authorities and experts, undertake a token scoping review to identify the most appropriate method to characterize the different kinds of digital property tokens in Australia.
- The committee also proposes that the Australian Government create a new business structure called a Decentralised Autonomous Organization.
- The committee also advise that Anti-Money Laundering & Counter-Terrorism Financing rules be explained to ensure they are fit with purpose, do not stifle innovation, and take into account the rationale behind a Financial Action Task Force’s ‘travel rule.’
- The committee proposes amending its Capital Gains Tax (CGT) system to require that digital asset purchases trigger a CGT event only when they result in a strictly delineated capital gain or loss.
- The committee suggested that the Australian Government modify applicable laws to provide a 10% corporation tax credit to companies doing digital asset ‘mining’ and associated activities in Australia provided they use their own renewable energy to conduct these operations.
- The report recommended that the Treasury conduct an independent policy assessment of the feasibility of a retail Banking System for Digital funds in Australia.
- The commission recommended that the Australian Government, via the Board of Financial Regulators, implement the ACCC’s 2019 proposal of a plan to address banks’ due diligence obligations, to be implemented by June 2022.
- The committee proposes that the Australian Government provide a clear procedure for companies that have been de-banked in order to enhance clarity and openness around de-banking. This should be centered on the Australian Financial Protection Authority, which is responsible for the oversight of regulated companies.
- The committee proposes that, in line with the conclusions about Mr Scott Farrell’s current Payments system study, the Reserve Bank establishes standard access criteria for the New Payroll Process in order to decrease payment companies’ dependence on the big banks for banking services.
By the end of 2022, the committee suggested that the Australian Government should create a Global Markets Incentive for the replacement of the Offshore Banking Units.