What's next for cryptocurrency regulation in Australia in 2023?

Cryptocurrency regulation in Australia has become an increasingly pressing matter, with growing interest in the technology and it’s associated risks. The Australian government has already taken steps to establish a framework of laws, but the industry is rapidly evolving, leading to speculation on what might come next. In this blog post, we will discuss the current developments in cryptocurrency regulation within Australia and speculate on what regulatory measures may be implemented by 2023. From potential taxation policies to consumer protection rules and more, readers can get an understanding of how cryptocurrency regulations may change over time.

Australia has realised the need for more specific regulation in its current crypto environment, as digital assets do not fit into existing financial services regulations. Therefore, the Australian Government is taking action to improve regulatory frameworks around cryptocurrencies and will introduce legislation by 2023.

The existing regulatory landscape

As Australia has yet to pass any laws specifically regarding cryptocurrency, existing legislation may apply in certain cases. Businesses within the crypto sector should take into account their potential need for compliance with:

• The anti-money laundering and counter-terrorism financing (AML/CTF) regime, given the rising use of cryptocurrency by criminal and terrorist groups1

• The financial services regime under the Corporations Act 2001 (Cth). Under current regulations, crypto assets that are or form part of an investment product or exchange traded product require an Australian financial services licence (AFSL) or an exemption (see the Australian Securities and Investments Commission (ASIC) Information Sheet 225)

• The credit activities and services regime, where cryptocurrency lending activities may require a credit licence under the National Credit Consumer Protection Act 2009 (Cth) (NCCPA)

• The electronic transactions regulation for self-executing transactions using blockchain or distributed ledger technology, pursuant to the Electronic Transactions Act 1999 (Cth)

• The consumer law and unfair contract terms regime under the Australian Consumer Law (ACL), set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth)

The next phase of crypto regulation

Senator Andrew Bragg of the Liberal Party has proposed a revolutionary new bill – The Digital Assets (Market Regulation) Bill 2022 – which is now being considered by Parliament. If passed, this law would have sweeping implications related to cryptocurrency transactions and trading in Australia.

The current Labor Government is highly unlikely to pass this Bill in its existing version. Nevertheless, Senator Bragg’s hard work may influence the regulations that get passed eventually.

Australia is taking steps to protect consumers of blockchain assets and services while propelling their own competitive edge in the industry, despite cryptocurrency markets being extremely volatile. Blockchain remains an innovative technology that has the potential to generate substantial transformation.

Cryptocurrency regulation is expected to make its way into the Australian market in some capacity soon. Senator Bragg’s Bill may not pass as-is, but it has been crafted with input from Australia’s crypto industry players and could be a foundation for how cryptocurrency will be regulated in Australia going forward.

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