Australia is facing a critical juncture in its approach to cryptocurrency regulation as the fate of the Digital Assets (Market Regulation) Bill hangs in the balance. Senator Andrew Bragg, the author of the bill, has issued a stark warning that if the legislation is rejected by parliament, Australian investors will be left exposed to unregulated markets, potentially driving investments away from the country.
Senate committee suggested the rejection of the bill
On September 4, the Senate Committee on Economics Legislation made a significant recommendation, suggesting that the Senate reject Bragg’s bill. Instead, they proposed that the government continue consulting with the crypto industry to formulate appropriate regulatory frameworks. The committee’s chair, Labor Party Senator Jess Walsh, explained in a report that they recommended against passing the bill because it “fails to interoperate with the established regulatory landscape, creating a genuine concern for regulatory arbitrage and adverse outcomes to the industry.”
Senator Bragg vehemently criticized the committee’s recommendation, asserting that it could “expose consumers to an unregulated market and drive investment offshore.” He highlighted the dual benefits of digital asset regulations: safeguarding consumers and stimulating market investment and activity. Bragg emphasized that these regulations had been placed on the legislative agenda by the former Liberal government in October 2021. However, Bragg perceived the rejection of his bill as being largely influenced by partisan politics, given the number of Labor Party members on the Senate Committee.
He accused their decision to oppose his draft bill of stalling the implementation of digital asset regulations in Australia. Bragg lamented the situation, stating, “Australia would have a regulated digital assets market. Instead, it is close to the end of 2023, and the government has no plan to implement these regulations. While Bragg attributed the rejection to partisan politics, Liam Hennessey, a partner at international law firm Clyde & Co., offered a different perspective.
Impact of the bill on the Australian market
On the rejection of Bragg’s draft bill, Hennessy said it was more related to a separate regulatory process, specifically the Treasury’s consultation paper on the government’s “token mapping” exercise. Hennessey stated that the recommended rejection of Bragg’s bill doesn’t necessarily spell doom for crypto regulation in Australia. He emphasized that Senator Bragg’s bill and the industry feedback it garnered would still be considered. He noted that the Senate was currently dealing with a backlog of legislation, which could explain the delay.
“I think [Bragg’s] bill, and the work that went into it, will be valuable in informing the government’s approach,” Hennessey concluded. The Labor government initiated the token mapping exercise last August, using the Treasury to identify how crypto assets and related services should be regulated. This exercise was meant to guide future regulatory decisions. On February 3, the Treasury released a public consultation paper on the exercise, positioning it as a foundational step in the government’s plan to regulate the digital asset market.
However, since then, there has been minimal mention of digital assets or the broader regulatory approach from the government. Senator Bragg introduced the Digital Assets (Market Regulation) Bill 2023 in March with the primary objective of protecting consumers and promoting investor confidence. The bill contains recommendations for regulating stablecoins, licensing exchanges, and defining custody requirements. Currently, the bill is before the Senate and is expected to be voted on during the next sitting session.
Australia’s decision regarding the Digital Assets (Market Regulation) Bill carries significant implications for its position in the global crypto landscape. The outcome will determine whether the country embraces digital assets with clear regulatory guidelines or risks falling behind other nations that have already taken steps to regulate this burgeoning industry.
