Australia Aims to Regulate Crypto under Financial System Makeover

The Australian government wants to legislate the cryptocurrency industry and crypto service providers in 2023, according to a country's Treasury statement released on Wednesday. The action is a part of a broader strategy to modernize the entire financial system, including the payments industry.

The Australian Treasury representatives stated that regulating cryptocurrencies will help improve security for Australian consumers. A consultation paper will be published early next year as part of the ongoing 'token mapping' work. The report will determine which cryptocurrencies should be regulated and how.

In August 2022, Australia announced that it would focus on reviewing the characteristics of individual crypto assets (token mapping) to define their technological features. This effort is expected to be summarized in the publication of a consultation on complex market regulation early next year.

"Following the release of token mapping, the Government will consult on a custody and licensing framework next year before introducing legislation," the country's Treasury commented in a written statement.

The suggestions that the crypto industry in Australia should be regulated have appeared numerous times, last in March 2022. The Australian Cyber Security Industry Advisory Committee has released its analysis showing that at least three million Australians use cryptocurrency products. The rising scale of cryptocurrency usage requires a rapid introduction of a regulatory framework, according to the Committee.

The first steps in this direction were taken a few weeks later, when the treasury department of the Australian government released a paper defining cryptocurrencies, outlining a plan for implementing regulations.

Modernizing Australia's Finance

Establishing a framework for licensing and regulating cryptocurrency service providers is the last of four points included in the proposal to modernize the Australian financial system. In 2023, the government wants to update and intensify the payments industry, revitalize the financial markets infrastructure and set Buy now Pay Later (BnPL) regulations.

"Unfortunately, our regulatory architecture has not kept pace with changes in the market, including the advent of new digital products and services. In many areas, the previous government sat on its hands. In other areas, it made announcements but didn't deliver," Stephen Jones, the Australian Minister for Financial Services, said.

Recent analyses of Australia's current payment and financial system showed shortcomings in the existing frameworks. The government aims to work closely with the Reserve Bank of Australia (RBA) and the Australian Securities & Investments Commission (ASIC) on new strategies, providing them with additional powers.