Aussie executives refute the ‘argument’ for treating cryptos as financial products
Australian crypto leaders have urged caution in lumping all digital assets into the same boat as financial products, following recent comments by Australia’s Assistant Treasurer on the matter.
Assistant Treasurer and Minister for Financial Services Stephen Jones provided an overview of the state of crypto regulation in the country in an interview with the Sydney Morning Herald published on January 22.
He confirmed that the government was on track with its “token mapping” exercise this year to determine which cryptoassets will be regulated, with a consultation process “soon to start” with the industry, according to a crypto exchange executive.
However, Jones said he was “not too keen” on setting up a whole new set of regulations for what he believes is essentially a financial product.
“I do not wish to pre-judge the outcome of the consultation process we are about to embark on. But I take it as a starting point that if it looks like a duck, walks like a duck and sounds like a duck, then it should be treated like one, Jones said.
“Other coins or other tokens are essentially used as a store of value for investment and speculation. [There is a] good argument that they should be treated as a financial product.”
The Australian Securities and Investments Commission (ASIC) and one of Australia’s “Big 4” banks, the Commonwealth Bank, both also support the regulation of cryptos as financial products, according to SMH.
Crypto bosses warn of ‘broad’ approach
However, crypto market participants have urged caution with a broad approach to crypto assets.
Speaking to Cointelegraph, blockchain and digital asset attorney and Piper Alderman partner Michael Bacina warned that “a broad approach to classifying a technology as a financial product without a clear and workable path to licensing and compliance is likely to send even more crypto businesses offshore and create more Danger.”
Adam Percy, general counsel of domestic crypto exchange Swyftx, echoed this sentiment in statements to Cointelegraph, saying:
“The trick is to protect consumers without deregulating well-run domestic digital asset companies and forcing people to use off-shore exchanges subject to less stringent checks and balances.”
Meanwhile, Holger Arians, CEO of crypto on-ramp provider Banxa, shared concerns that over-regulation could “severely affect” the pioneering role that Australia has played in crypto.
Caroline Bowler, CEO of Australian crypto exchange BTCMarkets, also warned against an “overly prescriptive approach” to regulation.
“This could put our digital economy on the back foot, over time, and stifle our international competitiveness.”
Australian financial regulators have yet to officially formulate their regulatory framework, but in light of the FTX meltdown in November, Australian policymakers and their global counterparts have seen more urgency for action.
Jones said the FTX collapse “puts beyond doubt” the need for crypto regulation.
Related: Australia’s new government is finally signaling its stance on crypto regulation
In September, Australian crypto entrepreneur and investor Fred Schebesta warned that rushing the token chart could be problematic for the industry.
The intricacies of token mapping are not clear, and Australia’s “new” crypto industry needs to “adapt to the other major markets and their regulations,” he added.
Crypto lobby group Blockchain Australia agreed, arguing at the time that treating all crypto assets as financial products would harm the crypto sector’s investment and innovation, and result in the loss of industry-related jobs.
