Australia Launches Modernized Financial System to Regulate Crypto

• The Australian government is developing a framework for regulating crypto firms next year 
• Sam Bankman-Fried’s rapid fall has brought the debate over how to regulate crypto to the forefront.

The Australian government is expected to release a consultation paper in early 2023 to decide the kind of digital assets it wants to regulate and put in place appropriate custody and licensing rules. The move is part of a broader effort by the government to improve safety in the crypto space.

“The one constant in finance is change,” said Australian Treasurer Jim Chalmers. “It’s fast moving, dynamic and our regulatory frameworks haven’t kept up. Our reforms are about starting to fix that in pursuit of a financial system that is stronger and more secure.”

The consultation paper will be based on a “token mapping” approach, which will involve analyzing different types of digital assets to determine how they should be regulated. This approach is seen as more detailed and easily interpretable than other methods of regulation.

The previous Australian government had dabbled in crypto asset regulation, but it did not go far enough. The new government is committed to taking a more comprehensive approach to regulation.

“We will consult on a comprehensive regulatory framework for crypto assets,” said Chalmers. “This will include a focus on consumer protection, market integrity and preventing financial crime.”

The Australian government’s move to regulate crypto assets is in line with the trend of other countries around the world. As the crypto market grows, regulators are increasingly taking steps to protect investors and prevent fraud.

The collapse of the cryptocurrency exchange FTX last month is a reminder of the risks that exist in the crypto space. With the right kind of regulations in place, the government can make the cryptocurrency market a safer environment for investors.

The consultation paper on crypto regulation is expected to be released in early 2023. The Australian government is committed to working with stakeholders to develop a framework that is fair, effective and protects consumers.