The Select Committee on Financial and Regulatory Technology recently tabled its final report on the regulation of cryptocurrency in Australia.
On the back of the newly released Australian Bitcoin Futures ETF, the Select Committee has found that the national regulation of cryptocurrency is lacking behind the rest of the world. According to the Select Committee, with the right guidance and regulatory reform, Australia has the potential to become a technological and financial centre to lead the global digital economy. As such, the Select Committee has proposed 12 recommendations:
1. Establish a market licensing regime for digital currency exchanges
2. Establish a custody or depository regime for digital assets in Treasury
3. Conduct a “token mapping” exercise to characterise various types of digital asset tokens
4. Establish a new decentralised autonomous organisation (DAO) company structure
5. Clarify AML regulations to ensure they are fit for purpose and do not undermine innovation
6. Amend the capital gains tax regime so digital asset transactions only incur capital gains tax when they genuinely result in a clearly definable capital gain or loss
7. Amend laws so digital asset miners receive a company tax discount of 10 per cent if they source their own renewable energy
8. Have Treasury lead a policy review of the viability of a retail central bank digital currency in Australia
9. Ensure the Council of Financial Regulators implements a scheme to address the due diligence requirements of banks by June 2022
10. Develop a clear process for businesses that have been de-banked, anchored around the Australian Financial Complaints Authority
11. Ask the RBA to develop common access requirements for the new payments platform
12. Establish a global markets incentive to replace the offshore banking unit regime by the end of 2022
Many of these proposed recommendations have been considered for quite some time by authorities and key players. The establishment of a DAO is likely to be the greatest change in this proposed regulatory reform. These DAO structures are governed by individuals across the web and are free from any centralised interference. If the Corporations Act 2001 (Cth) were to give recognition to these DAOs, decentralised finance would have the opportunity to lawfully disrupt the current financial and banking system. Similarly, many proposals are in favour of consumers and individuals with tax benefits and also encourage the of innovation into cryptocurrency and blockchain technology. With further development around such laws, cryptocurrency will only have its position solidified as a real asset.