The Albanese Government is acting to ensure the regulation of crypto assets protects consumers and positions our economy to take advantage of new digital products and services. Unsustainable business models used by some companies dealing in crypto assets have left consumers exposed.
The previous government dabbled in crypto policy but never took the time to future‑proof our regulatory frameworks to protect consumers and guide this new and emerging class of assets. We are acting swiftly and methodically to ensure that consumers are adequately protected and true innovation can flourish.
In Australia, cryptocurrencies are generally treated as an investment, but it’s unclear whether individuals buying crypto assets and non-fungible tokens (NFTs) truly appreciate the speculative nature of these investments.
A recent survey by ASIC found crypto was the second most common product type held after Australian shares. Yep, you read that right. ASIC Chair Joe Longo said mainstream adoption made a case for regulation to protect unwary people: “According to the survey, only 20% of cryptocurrency owners considered their investment approach to be ‘risk-taking’, raising concerns that investors did not understand the risks of this asset class.”
There have been many high-profile hacks, scams and collapses, such as the recent downfall of the world’s second-largest crypto exchange FTX, which left many people out-of-pocket and reduced confidence across the market. FTX was widely considered a legitimate player, but folded within days and is now the subject of multiple investigations by US regulators. In Australia, administrators KordaMentha are poring over the books of the Australian-registered entities, with some 30,000 people believed to be out of pocket.
Crypto asset values can, and do, rise and fall dramatically based on nothing more than a tweet, and investors have few protections if companies become insolvent or experience security breaches. Additionally, crypto has created new and confusing tax obligations.
While immediate action is being taken now to protect consumers, additional work needs to be done in order to understand the risks and opportunities crypto poses for the future. This begins with Treasury’s token mapping exercise.
A consultation paper released today explores in detail which elements of the crypto ecosystem are sufficiently regulated and which require additional attention. This will enable the Government and stakeholders to focus on regulatory gaps and ensure that emerging risks are identified and controlled.
The Albanese Government is committed to working methodically with regulators, industry, and consumer and business advocacy groups to get the policy settings right to protect consumers and support innovation in this emerging sector.