Released on Monday, the draft bill follows the recommendations made by a Senate committee, which Bragg chaired last year before the election, including a licensing regime for local crypto exchanges, custody requirements for digital assets, and new rules for firms looking to issue stablecoins.
Australia’s crypto industry has been calling for increased regulation for some time to improve legislative certainty and consumer trust, and Bragg said he believed it was important the momentum gained from last year’s consultations was not lost.
“We’d done this body of work on [crypto regulation], and I wanted to make sure we finished it off,” he said. “My hope is it will improve the quality of the conversation – the debate on digital assets is very unsophisticated in Australia.”
“You couldn’t argue that the government has given much thought to it. They’ve put out one press release saying they might do a token mapping exercise in the future.”
Currently, companies involved in the cryptocurrency industry are very loosely regulated. An exchange, which allows users to buy and sell digital assets such as Bitcoin, is only required to collect customer data for financial intelligence watchdog AUSTRAC and follow the general laws of the Corporations Act.
Under new regulations proposed by Bragg this would change, with the introduction of a new licensing regime similar to the one used to regulate market operators like the ASX. This would include minimum capital requirements, better monitoring of user activity, segregation of customer funds, stronger cybersecurity requirements, and regular disclosures to government agencies.
Bragg said this would end the “regulatory arbitrage” between the crypto industry and the heavily regulated financial services industry along with providing certainty for firms wanting to issue stablecoins: digital assets that do not fluctuate in price and are typically ‘pegged’ to an existing currency.