As cryptocurrencies develop and the number of their users increases, the need for regulation of digital assets continues to grow. Cryptocurrencies are a fundamentally new asset and progressive technology that requires its own approach to regulation due to its novelty.
Therefore, many governments do not hurry to adopt regulation of cryptocurrencies and are carefully studying the technology itself and its capabilities before they develop and approve regulations.
Australia plans to issue a 'token mapping' consultation paper to outline the status of digital assets and their regulation within the country. The paper is scheduled for release in early 2023.
The consultation document will provide guidance on how certain crypto-assets should be regulated. It is also planned to consider issues of licensing procedures for cryptocurrency companies, storage of assets and consumer protection when they use digital assets.
Still in many countries, cryptocurrency users are not protected by legislation. It means that they become victims of all kinds of fraudsters, racketeers and other criminals who take advantage of the lack of regulation to avoid punishment.
It provokes criminals to commit new crimes. Because of these factors cryptocurrencies themselves have a reputation as very high-risk assets.
Australian Treasurer Jim Chalmers said the government will publish a consultation paper in early 2023 as part of its initiative to regulate digital assets.
The crypto sector has received more attention from Australian regulators and enforcers since the collapse of FTX. This bankruptcy illustrated just how defenseless users of digital assets are in the face of fraudulent actions by exchange owners.
Many people have lost their money and the need to regulate cryptocurrencies arises to prevent a repeat of this situation in the future.
Against this backdrop, the government emphasizes the importance of enacting stricter consumer protection laws as soon as possible.
To reassure digital asset investors and bolster shattered confidence in cryptocurrencies, the Anthony Albanese-led government said it is taking steps to improve regulation of crypto-service providers and provide additional guarantees for Australians.
The consultation document will outline how certain crypto-assets should be regulated, which companies should be licensed, how cryptocurrency assets should be stored, and will specify what measures will be taken to protect consumers of digital assets.
Following the token mapping release, the government will consult on the cryptocurrency custody and licensing system in 2023 before enacting these regulations into national law.
The Ministry of Finance plans to develop and enact a robust regulatory framework for cryptocurrencies in 2023.
The focus on cryptocurrency regulation is part of an effort to "modernize Australia's financial system."
The government plans to reform the financial market infrastructure - particularly with respect to the Australian Securities Exchange's clearing system, payment systems and the buy now, pay later sector.
The Australian government is very much in favor of crypto. It regularly declares the importance of ensuring innovation while protecting public safety.
On Dec. 8, the Reserve Bank of Australia released a report on stablecoins, stating that regulators are "doing significant work" to figure out how to safely integrate them into the financial ecosystem.
Stablecoins have the potential to improve the efficiency and functionality of a range of payment and other financial services.