Charting the way forward for crypto regulation in Australia

Australia is lagging behind when it comes to crypto regulation. There’s a lot at stake, which has brought the Australian crypto industry together – as Jonathon Miller, Kraken’s Australia managing director explains…

Australians love crypto – almost one in four Australians own cryptocurrencies, the highest adoption rate in the world. Despite this rapid adoption of blockchain technology, we have fallen behind in implementing a regulatory framework that will govern digital assets in the long term.

While interest in digital assets has rebounded in Australia and around the world, the lack of clear regulation could see us fall behind major financial markets like Singapore, Europe and the UK. Regulation, when implemented well, provides entrepreneurs and established industry players with a rulebook they can refer to when making decisions, gives investors a better idea of ​​which crypto projects to invest in, and protects consumers against unscrupulous practices.

Shaping digital asset regulation in Australia

So what does good regulation look like? Earlier this year, Kraken was invited to collaborate with other leading experts in the Australian blockchain and digital assets sector to develop a set of recommendations for how a regulatory framework could work.

Here are some of the key takeaways from this work which form the basis of what Blockchain Australia will advocate for as we seek to develop a regulatory framework that is fit for purpose.

Recommendations from the Roundtable on Conservation and Asset Management

1. Solving Crypto Business Debanking

One of the most frustrating situations that individual investors face is the unjustified denial of services from traditional financial players, which also affects confidence in the business side of the digital asset sector. Blockchain Australia recommends creating a standard framework for banks to assess risks when dealing with crypto businesses, inspired by successful models like Hong Kong’s, to bring more trust and certainty to crypto transactions and fiat currencies.

2. Information sharing and scam mitigation

To combat scams, we need to improve information-sharing pathways between banks, digital asset exchanges (like Kraken), and regulators. Establishing industry-wide standards for scam prevention through the use of advanced analytics helps protect consumers and encourage safer crypto transactions.

3. Create a clear token taxonomy

“Crypto” is shorthand for a very broad range of thousands of assets. Developing a clear token taxonomy to differentiate between different types of digital assets will go a long way in providing clarity that will help investors make informed decisions as they navigate the crypto market with more confidence.

4. Consumer education programs

As an industry, we have much more educational work to do than just highlighting how to avoid scams. Launching comprehensive consumer education programs covering all aspects of digital assets shouldn’t just be an aspiration, it should be table stakes for any crypto business. These resources must be accessible to a broader audience, including regulatory stakeholders, institutional audiences and individual investors. . By developing a central hub for accurate educational materials and aligning them with industry needs, we can close the knowledge gap and drive greater adoption of crypto.

5. Simplifying the tax treatment of crypto-assets

Currently, the adoption of cryptocurrencies is held back by people who do not understand their tax obligations when trading or transacting with cryptocurrencies. Simplifying tax reporting and compliance processes for crypto assets will go a long way in setting expectations for the crypto community. Clearer tax classifications and a standardized reporting process would make it easier for everyone to fulfill their tax obligations without confusion.

6. Jail

We advocate for clear custody regulations, with an emphasis on regulating entities that exercise direct control over consumer assets. A flexible and adaptable regulatory approach that distinguishes between direct and indirect control of assets will ensure that custody practices keep pace with technological advances and continue to effectively protect consumer assets.

A way forward

The blockchain industry, despite its growing popularity, is still in its infancy, especially compared to traditional finance. Regulation that protects consumers while promoting market competition and innovation is a difficult balance, but it will be vital as the economy becomes even more digital.

Slow action or a poor approach by policymakers could lead to capital flight and see Australia lose leadership in a market that should be worth fighting for.
$3 trillion in global trade by 2030. The stakes are high – and Kraken is proud to contribute to the growth of the industry in Australia.

This article was developed in collaboration with Kraken, a Stockhead advertiser at the time of publication.

This article does not constitute advice on financial products. You should consider obtaining independent advice before making any financial decisions.

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