Govt Crypto Consultation Paper – What Does It Mean For Consumers?
This week the Australian Government released a Consultation Paper on a proposed regulatory framework for digital assets (aka cryptocurrencies). Its key objectives include:
- Establishing licensing rules for crypto custody and exchanges
- Commence a token mapping exercise to better define different digital assets
- Review of tax rules for crypto transactions and investment
You can check out the paper in full here.
Why are the government planning to regulate digital assets and what does it mean for consumers?
One of the major reasons the government is rolling out regulation of digital assets is because there’s a massive appetite for it from both the business community and consumers. It was recently reported that four in five Australian businesses would be more likely to allow customers to pay with crypto if it were regulated.
Once a niche product, cryptocurrencies are quickly becoming mainstream. A recent survey found 77% of survey participants expect crypto to be a mainstream part of the financial sector in five years. There’s also plenty of evidence that business and government want Australia to become a leader in the space.
People often argue that regulation can stifle industries, however based on the government’s paper, it’s clear they’re planning a pro-innovation regulatory regime when it comes to digital assets. What they’re proposing will provide a safe framework that will invite the once hesitant mainstream into the tent and grow the industry as a whole.
Why is it in the government’s interest to support digital assets? A report released by EY in November found the cryptocurrency sector contributed $2.1 billion to the Australian economy and employs around 11,600 people. This is set to climb.
What does regulation mean for consumers?
Firsty; regulation offers them protection. Where once crypto was the wild west of the internet, regulation would ‘bring it out of the darkness’ and offer everyday consumers greater confidence in investing in the space.
Treasurer Josh Frydenberg said “cryptocurrencies and assets are a global phenomenon, and as more Australians invest in these new asset classes and embrace the new technologies underpinning them, it is critical that we have a robust and competitive tax and regulatory regime in place. Tax certainty for investors and those transacting will also be vital.”
Not only could it benefit investors, but it could offer people opportunities to earn as it’s believed digital assets can “tilt the digital playing field towards content creators and away from the global tech giants that enjoy outsize influence over the most lucrative internet gateways today.”
It could also lower the cost of payments for consumers. Minister for the Digital Economy, Jane Hume, recently stated that “decentralised finance, which allows banking-style “services to run on decentralised networks without the involvement of intermediary banks and exchanges”, is “one of the most exciting frontiers I have seen”. We here at SmartWayToPay couldn’t agree more. Anything that brings down the cost of payments for consumers, can only be considered a good thing!