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Australia will become the first country to chart the number, type and underlying code of available cryptocurrencies as the federal government seeks to protect investors from themselves and an avalanche of advertising spruiking the technology.
The government on Monday will announce it will “token map” the Australian crypto asset sector as a first step towards fresh regulation in the cryptocurrencies area, which the tax office estimates more than one million people have “interacted” with since 2018.
Australia will undertake the world’s first “token mapping” of the crypto sector, ahead of possible regulatory reforms of cryptocurrencies such as Bitcoin and Dogecoin.Credit:Getty
The entire crypto investment space, from established names such as bitcoin to stablecoins to non-fungible tokens (NFTs), is coming under increasing regulatory focus from governments and central banks.
This year, the Bank for International Settlements – the world’s peak central bank – labelled bitcoin and other cryptos as speculative assets used by organised crime and a waste of energy.
But it also said there was space for central banks to create their own digital currencies as a way to push down the cost of traditional banking and currency services.
The Reserve Bank of Australia is to trial a digital currency in a “ring-fenced” pilot program as part of a year-long collaborative research project into how it could be used by consumers and businesses.
Treasurer Jim Chalmers said the government wanted to improve the regulatory system around crypto assets with an aim to offer more protections to consumers and investors.
“As it stands, the crypto sector is largely unregulated, and we need to do some work to get the balance right so we can embrace new and innovative technologies while safeguarding consumers,” he said.
“With the increasingly widespread proliferation of crypto assets – to the extent that crypto advertisements can be seen plastered all over big sporting events – we need to make sure customers engaging with crypto are adequately informed and protected.”
Ahead of a formal consultation paper with the sector about a regulatory framework, Treasury will this year token map the Australian crypto market.
It will seek to uncover the characteristics of all digital asset tokens available in Australia. That will include the type of crypto asset, their underlying code and any other defining technological features.
The mapping will be used to determine which crypto assets are already subject to financial services law and non-financial products that may require their own special legislation.
Chalmers said this was the first time any country had sought to map out the crypto landscape and the initiative would give a clear insight to help in deciding possible areas of regulation.
“The previous government dabbled in crypto asset regulation but prematurely jumped straight to options without first understanding what was being regulated. The Albanese government is taking a more serious approach to work out what is in the ecosystem and what risks need to be looked at first,” Chalmers said.
“The aim will be to identify notable gaps in the regulatory framework, progress work on a licensing framework, review innovative organisational structures, look at custody obligations for third-party custodians of crypto assets and provide additional consumer safeguards.”
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