Should crypto be treated as financial products.

Cryptocurrencies are digital assets that have disrupted the way we think about money and how financial products and services are consumed. While there has been a push for cryptocurrencies to be treated as financial products, this potential change is not without its controversy. This debate has crucial implications on the future of cryptocurrency regulations and public opinions towards it, meaning that understanding both sides of the issue is essential in order to reach an educated verdict. In today’s blog post, we will analyse what it really means to consider crypto as financial products and why some may still oppose such an idea.

On Jan. 22, the Australian Minister for Financial Services emphasised that there was a persuasive case for classifying cryptocurrencies as financial products.

In light of recent comments from Australia’s Assistant Treasurer and Minister for Financial Services Stephen Jones, Aussie crypto execs are cautioning against regarding all digital assets similarly to financial products. The Sydney Morning Herald published an interview with the assistant treasurer on January 22nd that included a comprehensive overview on how cryptocurrency is regulated in the nation.

According to a crypto exchange executive, the government is on track with their plan for “token mapping” this year in order to decide which cryptocurrency assets will be regulated. Furthermore, he mentioned that an industry consultation process would soon begin.

Nevertheless, Jones expressed he was “not particularly keen” to set up a brand-new system of rules for something which basically is a financial product that he believes in.

“I won’t presume the conclusion of this consultation process, however I firmly believe that if something appears to be a certain way, behaves in such mannerism and sounds as it is supposed to – then we should categorise it accordingly” Jones stated.

“Other coins or other tokens are being essentially used as a store of value for investment and speculation. [There is a] good argument that they should be treated like a financial product.”

The SMH reports that both the Australian Securities and Investments Commission (ASIC) and one of Australia’s largest banks — Commonwealth Bank— are fully behind regulating crypto as financial products.

Crypto market participants, however, have warned of the potential risks associated with a blanket approach to crypto assets.

Michael Bacina warns that a broad approach to labelling technology as a financial product without the presence of an easily accessible path for licensing and compliance will most likely force crypto businesses away from Australia, creating more risks in the process.

Adam Percy, the general counsel for Swyftx – a domestic crypto exchange – expressed his opinion and said:

“The trick is to protect consumers without regulating away well-run domestic digital asset businesses and forcing people to use off-shore exchanges subject to less rigorous checks and balances.”closing

Holger Arians, CEO of Banxa crypto on-ramp provider, fears that over-regulation could significantly damage Australia’s pioneering status in the field of cryptocurrencies. Caroline Bowler, head executive at BTCMarkets Australian exchange also cautioned against a highly structured approach to regulations.

“This may put our digital economy on the back foot, in time, smothering our international competitiveness.”

As of yet, Australia has not codified its financial regulations. But after the FTX crisis in November, Australian elected officials and their counterparts elsewhere have realized they must act swiftly to introduce regulation for cryptocurrency trading. Jones underscored that this incident “proves beyond doubt” how critical it is to regulate crypto activity.

Last month, Fred Schebesta, Australian crypto mogul and investor, cautioned that hastening the token mapping process may be hazardous for the crypto industry.

The complexities of token mapping remain foggy, and Australia’s still-developing crypto industry must correspond with the other top global markets as well as their respective regulations, he added.

Blockchain Australia, a crypto advocacy group, was quick to agree that if all digital assets were categorised as financial products, it would damage investment and progress in the sector and cause an abundance of industry-related job losses.

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