Australian Government Changes Financial Structure To Regulate Crypto

• The Australian government has released a consultation paper that aims to use certain current financial structures to regulate its cryptocurrency industry.
• The financial regulator in Australia might get more funding to manage cryptocurrency.
• The Office of the Treasurer of Australia is waiting for feedback till March 3.

Avoiding an “exhaustive, bespoke taxonomy” for cryptocurrencies, the Australian government has adopted a framework that separates cryptocurrency into public networks or smart contracts on the one hand, and intermediaries or service providers on the other. Officials are curious to learn if the current financial restrictions will be adequate for these categories.

The UK Treasury launched a crypto consultation on Thursday morning, and The Office of the Treasurer of Australia is following suit by asking for feedback from interested parties until March 3.

Moreover, officials are particularly interested in issues including whether cryptocurrency should be regulated independently or within the framework of current financial rules, how to protect investors, and how smart contracts function.

The consultation claims that “functionally-equivalent goods should be handled equally” by citing a 1997 financial systems inquiry. The Financial Stability Board recommended the “same activity, same risk, same regulation” principle in its proposed framework for crypto regulation, which was released in October.

Following the abrupt collapse of crypto behemoth FTX, the Australian government made a commitment in December to develop strategies for licensing and regulating cryptocurrency service providers.

The “logical next step” is establishing a licensing regime with minimum standards for crypto asset service providers, including secure custody, according to officials, who also intend to release a consultation proposing a licensing and custody framework for providers of crypto asset services in mid-2023.