The allure of new investment opportunities, the anonymity of trading, and the absence of third-party intervention have attracted both large and small-scale players to invest in crypto assets.
Survey data from the Senate Select Committee on Australia as a Technology and Financial Center shows that 17% of Australians currently own cryptocurrency, with an additional 13% planning to purchase cryptocurrency in the next few months. next 12 months, making Australia one of the biggest in the world. cryptocurrency adopters on a per capita basis.
Australia’s Commonwealth Bank recently announced plans to allow customers to trade cryptocurrencies, such as Bitcoin, on its mobile banking app.
But policymakers and regulators come into 2022 with a warning: cryptocurrency is high-risk play. In January 2022, the Australian Securities and Investments Commission (ASICs) has warned self-managed pension fund investors to beware of the growing number of crypto-related scams.
The Australian Competition and Consumer Commission (ACCC) estimates that investment scams cost Australians more than $150 million in 2021 alone.
While much of the appeal of cryptocurrency is the lack of regulation, the rise in scams and the potential for the currency to be used in money laundering and cyberattacks has led to growing calls to regulations.
Potential investors should beware that the cryptocurrency regulatory landscape is likely to change in 2022. The world of an under-regulated shadow industry is likely to be over soon. Here’s a look at where we are now and where we’re likely to go in 2022.
When it comes to cryptocurrency regulation, the role of Australian regulators is limited.
The Anti-Money Laundering and Terrorist Financing (Cth) Act 2006 does not regulate cryptocurrency or digital assets other than requiring digital currency exchange service providers to register with from AUSTRAC. This means that AUSTRAC’s power to monitor financial transactions and identify money laundering and fraud involving crypto-assets is limited.
ASIC can regulate crypto assets as long as they qualify as “financial products” within the meaning of Chapter 7 of the Companies Act 2001. However, a large number of crypto assets are not considered financial products and fall outside the regulatory power of ASIC. . When cryptocurrency service providers are not ASIC regulated, consumers run the risk of not being able to get ASIC relief or assistance in the event of a scam or platform failure. -form of cryptocurrency.
The Reserve Bank of Australia also does not currently have the authority to regulate cryptocurrency.
The unique qualities that make cryptocurrencies attractive to many consumers present challenges for regulators concerned with protecting retail investors and the stability of Australian financial markets. But many policymakers want to change that.
Senate report on Australia as a technology and financial center
In October 2021, the Senate Select Committee on Australia as a Technology and Financial Center released its final report on the regulation of crypto assets in response to growing concerns about volatility in cryptocurrency markets. The committee reviewed current crypto asset regulations and made a number of key recommendations, including:
- the establishment of a new market license regime for digital currency exchanges (ECD)
- a government-led token mapping exercise to determine how best to categorize different digital assets in Australia
- clarification of anti-money laundering or anti-terrorist financing laws to ensure they appropriately capture cryptocurrencies
- a new legal structure, the Decentralized Autonomous Organization (CAD), should be introduced into the Companies Act to give DAO token holders limited liability.
Settlement in 2022
In response to the Senate Select Committee’s final report, the federal government announced in December 2021 that by the end of 2022 it will:
- establish the framework to replace the current uniform payment license agreements with a functional framework
- receive a report from the Tax Council on an appropriate framework for the taxation of transactions and digital assets
- undertake a mapping exercise of existing cryptocurrencies and tokens to better inform consumers and others of the associated risks and benefits
- examine the potential of DAOs and how they can be integrated into Australia’s legal and financial regulatory frameworks.
With Australia poised to lead the charge in cryptocurrency regulation, 2022 is set to be an eventful year for regulators and investors. While there are no guarantees in an election year, the focus on cryptocurrency regulation by ASIC, ACCC, and hard work from customers, suggests that the momentum in support for legislative reform will only grow.