Crypto regulation bill rejected, Labor’s token mapping plan still MIA

Australia’s Senate Economics Legislation Committee has rejected Senator Andrew Bragg’s cryptocurrency regulation bill. The Digital Assets (Market Regulation) Bill 2023 aimed to impose minimum standards regarding minimum standards for crypto exchanges, disclosure and cybersecurity.

Bragg has been a long-time supporter of digital asset regulation, first handing down a map back in 2021, following it with The Digital Assets Bill earlier this year.

The committee, chaired by Senator Jess Walsh, rejected the bill on Monday.

The Senate Committee highlighted several reasons for its decision. It said that the bill lacked specifics and appeared to be misaligned with the current government’s stance on digital assets.

It also stated that the bill didn’t resonate with global standards and had the potential to raise regulatory discrepancies and negative repercussions for the industry.

“The committee recommends that the Australian government continue to consult with industry on the development of fit-for-purpose digital assets,” Walsh said in the majority report regarding the bill.

“The bill is at odds with the measured and industry-accepted approach the government is undertaking to ensure that current and new regulations are well considered and effective in supporting consumers and the digital assets industry.

“Considering the evidence presented to the inquiry, the committee is of the view that the bill lacks the detail and certainty that investors, consumers and the industry should be provided with. Crucially, the bill fails to interoperate with the established regulatory landscape, creating a genuine concern for regulatory arbitrage and adverse outcomes to the industry.”

The rejection has been perceived as a party-motivated decision due to the majority of Labor ministers making up the committee.

Senator Bragg, expressing his dissatisfaction, said that this move demonstrates the Labor government’s  approach to digital asset regulation, which has locked it “into the slow lane.”

Bragg wasn’t alone in this sentiment.

“The Senate Committee was expected to report on this Bill over a month ago and the industry has been eagerly awaiting Treasury consultation on crypto-custody and licensing,” said Blockchain Australia Chair and Digital Assets Lawyer Michael Bacina.

“That consultation should be able to build on the industry submissions published as part of the Senate Committee’s review of this Bill.”

Australia is trailing behind on cryptocurrency regulation

It’s been a year since August Labor announced its own token mapping program through the Treasury to “help identify how crypto assets and related services should be regulated”.

This was followed by the launch of a public consultation paper in February. with Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones announcing that ASIC would also expand its cryptocurrency compliance team.

But little has been said about by the federal government since.

Back in May, we reported that there wasn’t a single mention of  ‘cryptocurrency’ or ‘blockchain’ in any of the federal budget papers. Despite repeated attempts to find out why from the Treasury, we were left with no answers.

While the Labor government may be justified in its judgement of the Bragg Bill, it is about time that it ends its silence on cryptocurrency regulation in Australia.

Let’s not forget that in the last year alone ASIC went after three separate cryptocurrency platforms for offering what the watchdog alleges were unlicensed financial services products — Block Earner, Swyftx and Finder Earn.

While it’s imperative that we get laws and regulations right — the extended delay is keeping the door open for scammers and market manipulation.

It’s also continuing to place regular Australians in unnecessary financial danger in a time of economic desperation by allowing it to be very easy to invest in a sector without appropriate education, checks and balances in place.