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Experts push for legislation to transform Australia’s ‘inadequate’ crypto regulation

Experts push for legislation to transform Australia's 'inadequate' crypto regulation

An Australian Senate inquiry has recommended a host of new legislation to beef up the country’s crypto regulations that it termed ‘inadequate’. 

In a report, the Senate Committee on Australia as a Technology and Financial Center (ATFC) outlines 12 recommendations that would potentially place the country as a digital currency innovation hub if passed into law. 

Some of the key recommendations are calling for the rollout of new licenses for crypto exchanges, laws governing Decentralized Autonomous Organizations, a change in the capital gains tax in DeFi law, and a tax discount of 10% for crypto miners relying on renewable energy.

Under the committee’s proposals, the taxation system should be more flexible while specifying that digital asset transactions should only create a CGT event that results in genuine definable capital gain or loss.

Furthermore, to fit the sector’s objectives, the committee called for changes to the country’s anti-money laundering and counter-terrorism financing guidelines.

Exploring CBDC

The committee also wants the country to join its peers in exploring the viability of a central bank digital currency (CBDC). This comes after Australia, Singapore, Malaysia, and South Africa central banks announced a scheme to carry out a cross-border payments trial using different central bank digital currencies. The plan aims to assess if the project will enable transactions to be settled more cheaply and easily. 

The country’s Treasury is also tasked with establishing custody or depository regime for digital assets under the new proposals to bolster consumer confidence. 

The proposals follow a series of sessions between the committee and experts in the digital currency field. Some of the experts came from Blockchain Australia, crypto exchanges, and other crypto firms like Ripple. 

Most experts believe that regulating the sector should focus on risk-based approaches that will entail singling out ventures that need regulation if they pose significant risk.

The report notes that regulation will help unlock the enormous potential in economic opportunities. According to the report:

“It is clear that Australia needs a robust policy and regulatory framework for digital assets to protect consumers, promote investment in Australia, and deliver enhanced market competition.”

Notably, the report tabled in parliament on Wednesday stated that the lack of coordination between banking and digital assets firms was blocking innovations in the sector. 

Following the tabling, the new proposed regulations could be implemented within 12 months. 

The proposed guidelines follow a recent indication by the Australian government that it had intentions of heavily restricting the crypto sector. As we reported earlier, the country’s Finance Services Minister Jane Hume said that cryptocurrencies are here to stay while projecting that they will evolve into a critical asset class.

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