The Australian government has announced its multi-stage plan to address the regulation of cryptocurrency. This multi-stage approach will be designed to address the challenges posed by the growing digital currency industry — while promoting innovation and protecting consumers.
According to the announcement, “the multi‑stage approach has three elements: strengthening enforcement, bolstering consumer protection; and establishing a framework for reform.”
Making crypto safer for consumers
The government's plan to regulate cryptocurrencies will first start off with the Australian Securities & Investments Commission (ASIC), which is strengthening its team and ramping up enforcement measures in order to ensure that cryptocurrencies are marketed in compliance with financial licenses.
The government will put extra focus on protecting consumers from any potential risks associated with uninformed crypto investments. And so to that end, ASIC will also be emphasising the importance of proper risk disclosure to customers.
These steps are intended to step up efforts targeting scams, especially those involving cryptocurrencies.
“The Government’s National Anti‑Scams Centre, located within the Australian Competition and Consumer Commission (ACCC), will facilitate real‑time data sharing and the coordinated prevention and disruption of scams.”
Assessing regulatory gaps
In addition, the Australian government has introduced a token mapping consultation paper as part of its efforts to regulate the cryptocurrency market. The goal of this consultation paper is to identify which elements of the crypto ecosystem are adequately regulated — and where further regulation may be needed.
The paper focuses mainly on Bitcoin, recognising it as a cryptocurrency network that operates as a peer-to-peer payment system and a new form of currency. This will be integral in informing policy development in consumer-conscious and innovation-friendly ways going forward.
Alongside the consultation paper, the government has taken steps to combat scams, detect money laundering, and prevent terrorism financing in the past. These efforts demonstrate the government's commitment to creating a safe and secure cryptocurrency market in Australia.
Just the beginning
The Australian government's multi-stage plan for regulating cryptocurrency is a positive effort to create a thriving and secure market. However, its ultimate impact on innovation remains to be seen — regulation can stifle growth if it is too restrictive or burdensome.
The next important step in this national regulatory discourse will come with the release of a consultation paper on licensing and custody framework for cryptocurrencies, expected in mid-2023. This will provide further insight into the government's plans for the industry and help determine the best way to promote growth while protecting consumers.
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