The Australian government has redoubled its commitment to a strong regulatory framework for cryptocurrencies following the catastrophic collapse of FTX last week.
A spokesperson for the Australian Treasurer, Jim Chalmers said the Treasury is now planning the regulations it will implement next year to enhance investor protection.according to a November 16 report from the AFR.
The spokesperson made the announcement in light of the FTX crash last week, stating that he was closely monitoring the fallout from the FTX crash, “including increased volatility in the crypto asset markets and any spillovers in the broader financial markets,” adding:
“These developments highlight the lack of transparency and consumer protection in the cryptocurrency market, which is why our government is taking steps to improve regulatory frameworks while continuing to promote innovation.”
The request for an accelerated regulation comes when 30,000 Australians and 132 businesses have fallen victim to Sam Bankman Fried’s fallen empire.
Michael Bacina, a digital asset specialist at law firm Piper Alderman, told Cointelegraph that regulation was the only way forward to restore much-needed trust in trading platforms:
“Regulatory certainty is key to rebuilding trust around centralized exchanges, and while the law can’t eliminate bad behavior, it can set powerful rules and standards that make such behavior easier to find.”
For his part, Danny Talwar, the head of tax at crypto tax platform Koinly Australia, added that a robust regulatory regime can fill the holes that many seek to exploit:
“Following the fall of FTX highlights the need for sensible regulation within the world of cryptocurrencies, both nationally and globally, in order to remove uncertainty and remaining gray areas and provide clarity around to digital assets, especially for retail consumers.”
“[Pero] the challenge will be to ensure that the regulation does what it is intended to do to effectively protect consumers without suppressing the growth of the industry,” he added.
As for what regulation can entail, Talwar noted that while Australian trading platforms are required to comply with the Australian Transaction Reporting and Analysis Center (AUSTRAC), there have been recommendations to establish a market licensing regime.
The regime would include “capital adequacy and auditing standards to demonstrate the operational integrity” of trading platforms, which Talwar stressed is of great importance, as many exchanges are offering high-risk products to gain a competitive advantage.
Bacina also stated that the “measured approach” taken by the Australian government could position the country to become an industry leader in digital asset regulation:
“When Australia introduces custody rules enabling technology for centralized crypto asset holders, we will either be a leader in the space, or catch up, depending on how quickly other jurisdictions, such as Singapore and Europe, move forward in developing regulations. rules.”
The Treasury is also trying to provide greater investor protection by establishing a “token mapping” system, which will help identify how certain digital assets should be regulated, according to an Aug. 22 statement from Assistant Treasurer Stephen Jones.
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