Australian Crypto Regulation Crossroads: The Controversy Surrounding Senator Bragg’s Bill

Australian Senator Andrew Bragg has issued a stark warning, expressing concern that the rejection of his proposed Digital Assets (Market Regulation) Bill could leave Australian investors vulnerable in an unregulated crypto market and drive investments away from the country. However, there’s more to this story, as the rejection may be linked to a broader regulatory process within the Australian government. Let’s explore the nuances of this crypto bill and its potential impact on the Australian crypto landscape.

On September 4, the Senate Committee on Economics Legislation recommended that Senator Bragg’s bill be rejected, advocating instead for continued industry consultation to shape crypto regulations. Labor Party Senator Jess Walsh, the committee’s chair, cited concerns that the bill didn’t align with the existing regulatory framework and could lead to regulatory arbitrage and negative industry outcomes.

Senator Bragg, in response, argued that rejecting the bill would expose consumers to an unregulated market and drive investments offshore. He emphasized that digital asset regulations serve the dual purpose of protecting consumers and fostering market investment, echoing their introduction by the former Liberal government in October 2021.

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Bragg attributed the rejection of his bill to partisan politics, suggesting that it has hindered progress in implementing digital asset regulations in Australia. He lamented the absence of a government plan to implement these regulations, despite it being close to the end of 2023.

However, legal expert Liam Hennessey from Clyde & Co. suggested that the rejection was more closely tied to a separate regulatory process, particularly the Treasury’s consultation paper on “token mapping” for crypto assets. Hennessey believes that Senator Bragg’s bill and the industry feedback it generated will still be considered by the government, despite the rejection.

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The Australian government initiated the “token mapping” exercise in August, aiming to identify the appropriate regulatory approach for crypto assets and related services. While a public consultation paper was released by the Treasury on February 3, outlining plans for regulating the digital asset market, progress has been relatively quiet since then.

Senator Bragg initially introduced the Digital Assets (Market Regulation) Bill in March 2023, with the objective of safeguarding consumers and supporting investors. The bill outlines recommendations for regulating stablecoins, licensing cryptocurrency exchanges, and establishing custody requirements. It currently awaits a vote in the Senate during the upcoming session.

The fate of this crypto bill will undoubtedly have significant implications for the future of crypto regulation in Australia.”