Australian crypto executives have urged caution over lumping all digital assets in the same boat as financial products, after recent comments from Australia’s assistant treasurer on the matter.
Assistant Treasurer and Minister for Financial Services Stephen Jones gave an overview of the state of crypto regulation in the country in an interview with the Sydney Morning Herald published on Jan. 22.
He confirmed that the government was on track with its “token mapping” exercise this year to determine which crypto assets to regulate, with a consultation process “to start soon” with the industry, according to a crypto exchange executive.
However, Jones said he was “not that attracted” to setting up a completely new set of regulations for something that he believes in essence, is a financial product.
“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,” Jones said.
“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.”
The Australian Securities and Investments Commission (ASIC) and one of Australia's “Big 4” banks, Commonwealth Bank, are both also in support of regulating crypto as financial products, according to the SMH.
Crypto execs warn of ‘broad’ approach
However, crypto market participants have urged caution over a broad-stroke approach towards crypto assets.
Speaking to Cointelegraph, blockchain and digital asset lawyer and Piper Alderman partner Michael Bacina cautioned that “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.”
Adam Percy, general counsel for the domestic crypto exchange Swyftx, echoed thasentiment in statements to Cointelegraph, stating:
“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.”closing
Meanwhile, Holger Arians, CEO of crypto on-ramp provider Banxa, shared concerns that over-regulation could “seriously impact” the pioneering role that Australia has been playing in crypto.
Caroline Bowler, CEO of the Australian crypto exchange BTCMarkets, also warned against an “overly prescriptive approach” to regulation.
“This may put our digital economy on the back foot, in time, smothering our international competitiveness.”
Australian financial regulators have yet to officially formulate their regulatory framework, but in light of the FTX meltdown in November, Australian politicians and their global counterparts have seen greater urgency for action.
Jones said the FTX collapse “puts beyond doubt” the need for crypto regulation.
In September, Australian crypto entrepreneur and investor Fred Schebesta warned that rushing the token mapping could be problematic for the industry.
The intricacies of token mapping are not clear and Australia’s “fledgling” crypto industry needs to “align with the other major markets and their regulations,” he added.
Crypto lobby group Blockchain Australia concurred, arguing at the time that if all crypto assets were treated as financial products, it would harm crypto sector investment and innovation, and result in the loss of industry-related jobs.