In an interview on Jan. 22, Australia’s Minister for Financial Services stated that there is a “strong justification” to consider cryptocurrency as a financial product.
Following recent comments from Australia’s assistant treasurer on the issue, Australian crypto executives have recommended caution in classifying all digital currencies as financial products.
On January 22, Assistant Treasurer and Minister for Financial Services Stephen Jones spoke on the condition of crypto regulation in the country to the Sydney Morning Herald.
According to a crypto exchange executive, he acknowledged that the government was on track with its “token mapping” effort this year to determine which crypto assets to regulate, with a consultation process “to begin soon” with the industry.
Jones, on the other hand, stated that he was “not that attracted” to creating an entirely new set of regulations for what he views is essentially a financial product.
“I don’t want to pre-judge the conclusions of the consultation process we are about to embark on. “But I start with the premise that if it looks like a duck, walks like a duck, and sounds like a duck, it should be handled like a duck,” Jones explained.
“Other coins or other tokens are being essentially used as a store of value for investment and speculation. [There is a] good argument that they should be treated like a financial product.”
According to SMH, the Australian Securities and Investments Commission (ASIC) and Commonwealth Bank, one of Australia’s “Big 4” banks, are both in favour of regulating cryptocurrency as financial products.
However, crypto market insiders have cautioned against taking a wide approach to crypto assets.
Michael Bacina, Partner at Piper Alderman and blockchain and digital asset lawyer, warned Cointelegraph that “a broad approach to classifying a technology as a financial product without a clear and usable pathway to licencing and compliance will likely send even more crypto businesses offshore and create more risk.”
Swyftx General Counsel Adam Percy reiterated the idea in statements to Cointelegraph, saying:
“The trick is to protect consumers without regulating away well-run domestic digital asset businesses and forcing people to use off-shore exchanges subject to less rigorous checks and balances.”
Meanwhile, Holger Arians, CEO of crypto on-ramp provider Banxa, expressed concern that over-regulation could “seriously harm” Australia’s pioneering role in crypto.
Caroline Bowler, CEO of the Australian cryptocurrency exchange BTCMarkets, has similarly cautioned against a “overly prescriptive approach” to regulation.
“This may put our digital economy on the back foot, in time, smothering our international competitiveness.”
Australian financial regulators have yet to formalise their regulatory framework, but in light of the November FTX disaster, Australian lawmakers and their worldwide counterparts have sensed a greater urgency for action.
Jones stated that the FTX crash “disproves” the need for crypto regulation.
In September, Fred Schebesta, an Australian crypto entrepreneur and investor, warned that hastening the token mapping process could be detrimental to the sector.
The complexities of token mapping are unclear, and Australia’s “nascent” crypto business must “align with the other key markets and their regulations,” he noted.
Blockchain Australia agreed, claiming at the time that treating all crypto assets as financial products would hinder crypto sector investment and innovation, as well as result in the loss of industry-related jobs.