The Federal government is actively engaged in the regulation of digital and crypto asset platforms within Australia. These platforms manage substantial asset portfolios valued in the billions for Australian citizens, offering essential services like trading and staking.
While fostering innovation in this industry remains pivotal for stimulating growth and fostering competition within Australia's financial landscape, the rise in failures and vulnerabilities of these platforms underscores the imperative to introduce regulations aimed at safeguarding consumers.
Instances of digital asset platform failures, both on a local and global scale, have resulted in Australians either losing their assets or having to endure extended waits in creditor queues.
These proposed reforms aim to mitigate the likelihood of such collapses by elevating the operational standards of these platforms and enhancing their oversight.
The additional regulatory measures aim to accomplish three key objectives:
1. Establishing a framework that fosters innovation and industry growth.
2. Offering certainty and clarity to the industry stakeholders.
3. Safeguarding consumers and their assets from potential risks.
The government is advocating for a regulatory framework specifically tailored to the needs of the digital asset landscape. The proposed regulatory strategy centres on digital asset service providers responsible for safeguarding individuals' digital assets, rather than focusing solely on the tokens themselves. This approach is intended to mitigate the potential exploitation of regulatory loopholes and is forward-looking, anticipating a future where a diverse array of products will be tokenised.
The proposed regulations aim to maintain technological neutrality, ensuring that opportunities for future technological innovations remain unhindered. In cases where digital assets are presently subject to regulation as financial products, these existing regulations will persist.
The consultation closed on 1 December 2023 with further consultation on exposure draft legislation in 2024. There will then be a twelve month transitional period following legislation being made law.