What next for the crypto industry after more regulatory setbacks?
By Lachlan Feeney, Founder and CEO of Labrys
After an extended period during which crypto was elevated from the finance and business pages to the front pages, the industry is enjoying a quieter period. In the public eye, that is. Behind the scenes, innovation and investment is accelerating and the foundations for the industry’s long-term evolution and success are being laid.
The industry had also been hoping – though not with great optimism – that policymakers would soon agree on the legislation that would provide the clarity and mandate it needs to fulfil its long-term potential. However, last week, the Senate Committee on Economics Legislation rejected Senator Andrew Bragg’s Digital Assets (Market Regulation) Bill 2023.
The committee said the bill lacked detail and certainty and was at odds with the government’s approach; though the government is yet to reveal what that approach is. Few besides even the most ardent of industry evangelists would’ve been surprised by the rejection, but it still comes as a frustrating body blow to an industry crying out for regulation, and the clarity it affords.
But what happened? And why, even though not entirely unsurprising, is the industry frustrated?
Presently, there are no laws governing the crypto industry. Policymakers instead rely on existing legislation such as the Corporations Act and the Anti-Money Laundering Act. The industry is eager, not resistant, to regulation. It’s the lack of regulation and clarity – not fundamental flaws in the technology or the industry – that have contributed to many of the much-publicised issues in the last 18 months.
While now in opposition, Senator Bragg was tasked with devising a road map on crypto regulation in 2021, when in Government. The Treasury then embarked on a period of public consultation on custody and licensing requirements which concluded with Senator Bragg introducing a bill designed to protect consumers and promote investment and business innovation.
For businesses, regulation would’ve provided a framework for legal compliance, encouraging investments and the establishment of blockchain companies within the Australian market. Then there’s consumers who actually stand to gain the most from regulation – both directly and indirectly. Consumers at present, are the most at risk. Regulation enables policymakers and the industry to weed out scams and unscrupulous players, and instead stimulate investment in genuine, pragmatic and innovative solutions.
According to Labor senator Jess Walsh, chair of the committee: “The bill is at odds with the measured and industry-accepted approach the government is undertaking to ensure that current and new regulations are well considered and effective in supporting consumers and the digital assets industry.”
The government also proposed a token mapping exercise to address some of these concerns, though many within the sector were sceptical about its ability to do anything other than reiterate existing industry knowledge without offering significant insights into token classification and enforcement.
While we weren’t expecting mountains to be moved, anything would’ve been better than nothing. Ultimately, the government’s rejection is an indication of where the industry sits on its list of priorities. Regulation will come eventually, but for now we’re back to square one. Instead of attracting investment and championing innovation, the wrong message has been sent.
The industry is crying out for pragmatic, progressive regulation, which provides protection for consumers and the clarity needed to encourage industry innovation and enterprise investment. In the absence of a clear government vision, there will remain significant doubt from the industry over the future of cryptocurrencies and blockchain technology in the country.
We’re entering a time during which the global hierarchies which will last for decades will be formed. The countries that will establish a position at the summit of the industry globally will be those that are given the regulatory foundations and clarity to innovate, evolve and grow. While not perfect, the rejections of Senator Bragg’s bill sets us back in that quest.