Treasurer Jim Chalmers said the government is acting to ensure the regulation of crypto assets protects consumers and positions the economy to take advantage of new digital products and services.
“Unsustainable business models used by some companies dealing in crypto assets have left consumers exposed,” he said.
He said the government is looking to future-proof the previous government that dabbled in crypto policy but never took the time to future‑proof the regulatory frameworks to protect consumers and guide the new and emerging class of assets.
It is working on a multi‑stage approach that has three elements including strengthening enforcement; bolstering consumer protection; and establishing a framework for reform.
Mr Chalmers said Australia’s regulators are strengthening their focus on crypto asset providers to make sure they meet their obligations to Australian consumers.
Meanwhile, the Australian Securities and Investments Commission (ASIC) is also increasing the size of its crypto team and is upping enforcement measures.
“The regulator will take legal action where it identifies crypto offerings being marketed without the appropriate credit or financial services licence,” he said.
“ASIC will pay particular attention to ensuring that risks to consumers are appropriately disclosed.”
Mr Chalmers added the Australian Competition and Consumer Commission (ACCC) is also stepping up efforts to prevent scams, including those involving crypto assets.
“The Government’s National Anti‑Scams Centre, located within the ACCC, will facilitate real‑time data sharing and the coordinated prevention and disruption of scams,” he said.
In a report published last year, the ACCC’s Scamwatch noted that more scammers are seeking payment via crypto, with losses reported via this payment method totalling $221 million in 2022, a 162 per cent increase from the year earlier.
Digital currency exchanges are also regulated by AUSTRAC under the Anti Money Laundering and Counter Terrorism Financing Act for the purposes of preventing and detecting money laundering and terrorism financing.
The government is also planning to reform the licensing and custody of crypto assets, particularly for the subset of crypto assets that currently fall outside the financial services regulatory framework.
“We will establish a set of obligations and operational standards for crypto asset service providers to ensure they adequately safe‑keep assets for customers,” Mr Chalmers said.
“This will ensure consumers are protected from avoidable business failures or from the misuse of their assets by service providers.”
Consultation on the design of a custody and licensing framework will begin in mid‑2023 to allow for sufficient consultation prior to the introduction of legislation.
“While immediate action is being taken now to protect consumers, additional work needs to be done in order to understand the risks and opportunities crypto poses for the future,” Mr Chalmers said.
“This begins with Treasury’s token mapping exercise.”
A recently released consultation paper explores in detail which elements of the crypto ecosystem are sufficiently regulated and which require additional attention.
This will enable the government and stakeholders to focus on regulatory gaps and ensure that emerging risks are identified and controlled.
