Australian token mapping journey to set off
The Australian Government has announced a start to work on a token-mapping exercise for crypto-assets to help educate policy-makers and regulators, support the industry and provide protections for consumers. A press release from the Office of the Treasury has announced the Federal Government plans to commence token-mapping work this year.
Regulation is struggling to keep up with the fast-changing, which over one million taxpayers have interacted with some kind of crypto-asset since 2018, according to the Australian Taxation Office.
The token mapping was one of the recommendations of the Senate Report into crypto-assets, and is seen as an important first step to set definitions so that regulation is able to be made in a flexible manner.
Per the Assistant Treasurer:
As it stands, the crypto sector is largely unregulated, and we need to do some work to get the balance right so we can embrace new and innovative technologies while safeguarding consumers
Designed to be a "serious approach" by the Federal Government, the announcement goes further than the Senate Recommendation, noting that token-mapping exercise will help identify how crypto-assets and related services should be regulated. It will sensibly involve industry participants and stakeholders and should take on the Senate Inquiry's recommendation to look overseas as there is a wealth of work being done which can help move Australia forward.
Consumer protection is at the forefront of the exercise due to the accessibility and increasing proliferation of crypto assets:
The aim will be to identify notable gaps in the regulatory framework, progress work on a licensing framework, review innovative organisational structures, look at custody obligations for third party custodians of crypto assets and provide additional consumer safeguards.
With a public consultation paper to be released soon, Australia will be one of the first country to conducting this kind of exercise. In a press conference today, the Assistant Treasurer said:
With the increasingly widespread proliferation of crypto assets – to the extent that crypto advertisements can be seen plastered all over big sporting events – we need to make sure customers engaging with crypto are adequately informed and protected.
The previous government dabbled in crypto asset regulation but prematurely jumped straight to options without first understanding what was being regulated. The Albanese Government is taking a more serious approach to work out what is in the ecosystem and what risks need to be looked at first.
The second comment is a bit strange given the recent Senate Inquiry was entirely bipartisan and drew in submissions from a very broad range of industry participants, leading to the recommendation which is now being delivered on by the current government. Sensible engagement and learning will be needed to ensure the historical and misguided narrative around crypto-asset usage and risk doesn't overshadow the strides being taken around the world in crypto products and the retooling of business back offices using blockchain systems.