Industry calls for urgent crypto law reforms after Australian election
The crypto industry has called on Australia’s reelected government to make good on its promises and prioritize crypto legislation early in its new term.
Industry calls for urgent crypto law reforms after Australian election
The Australian crypto industry has called on the newly reelected Labor government to urgently make digital asset legislation a top priority to ensure Australia doesn’t fall further behind global markets.
The incumbent Australian Labor Party was returned in a landslide on May 3, picking up 54.9% of the two-party-preferred vote, against the Liberal and National Parties on 45.1%. Both parties went to the election promising crypto law reform, but only the opposition pledged to deliver draft legislation within 100 days.
Joy Lam, Binance’s head of global regulatory and APAC legal, said the exchange has been consulting with Treasury officials since late 2023 about its proposed legislation, and it was now time for action.
“Timing is really quite critical now because obviously it's something that has been discussed and kicked around for quite a few years,” she told Cointelegraph.
Coinbase managing director for APAC John O’Loghlen said the reelected Albanese Government has the “opportunity and the responsibility to move quickly on this issue” and called for a Crypto-Asset Taskforce to be established within its first 100 days “with the aim of bringing forward legislation that protects consumers, promotes innovation, and stops the exodus of talent and capital to other markets.”
Cryptocurrencies, Australia, Bitcoin Regulation
Reelected Prime Minister Anthony Albanese. Source: Anthony Albanese
BTC Markets CEO Caroline Bowler said that “beyond the political implications, this result sets the stage for meaningful progress in Australia’s approach to digital asset regulation.”
Lam noted that the UK released its draft regulations last week, stablecoin bills are moving forward in the US, and the EU has already implemented its MiCA legislation.
“So there's a very clear shift. Everyone's moving towards providing the regulatory framework that is needed for the industry to develop in a sustainable way. So time is really of the essence now.”
Draft crypto legislation within months
Treasurer Jim Chalmers’ office told Cointelegraph that exposure draft legislation would be released sometime this year for consultation, and any legislated reforms would be “phased in over time to minimize disruptions to existing businesses.”
Although the Treasury has draft legislation on “regulating digital asset platforms” and “payments system modernization” scheduled for release by the end of June, Lam isn’t confident. "I don't know whether this quarter specifically is still sort of the timeline,” she said.
While the ALP has been attacked by some over not taking any action in its first term in government, that may actually have resulted in a better outcome than legislation that took its cues from the approach of Joe Biden’s administration, which took a hard line on banks dealing with cryptocurrency and viewed most coins as securities.
Industry figures report a noticeable evolution in the government’s approach to crypto between when proposals were first put out for consultation at the end of 2023 and when the Treasury released its much more positive “Statement on Developing an innovative Australian digital asset industry” in March this year.
Cryptocurrencies, Australia, Bitcoin Regulation
Australia Votes running tally on the Australian election. Source: ABC
The statement sets out key priorities, such as using the existing Australian Financial Services License (AFSL) regime to underpin the regulation of Digital Asset Platforms and payment stablecoins. It’s focused on the safe custody of client assets by centralized providers and sidesteps issues around decentralized finance platforms.
Lam welcomed the use of the AFSL regime. “Obviously, we don't need to reinvent the wheel,” she said. “It’s something that people know and understand. It's a pretty sensible move, and it’s also going to be much easier for regulators.”
Tokenization and sandbox
The government will also review the Enhanced Regulatory Sandbox, which aims to provide space for innovative digital asset startups to grow free of red tape. The statement also highlights opportunities with tokenization.
Lam said the change in emphasis showed the government has been listening to the industry.
“It reflects the industry feedback that they would have received in 2023 as a result of the consultation, as well as the changing landscape because obviously it’s been evolving pretty quickly internationally,” Lam said.
“They do have the benefit now of looking at what has worked and hasn’t worked in other jurisdictions, and really building on those lessons.”
Dea Markovy, policy director at Fireblocks, told Cointelegraph that “a lot of the groundwork and research is done” and it was looking broadly positive.
“Of course, a lot of details are still to come around Australia’s Digital Asset Platforms (DAPs) regime. What is significant here is the willingness of the Government to cut through the complexity and uncertainty on crypto intermediaries licensing.”
The securities regulator ASIC released its own crypto regulations proposals (INFO 225) in December, and feedback from those consultations will help inform the government's new legislation.
“In essence, it details how different token issuances and crypto intermediation will fit into Australia’s existing securities legislation, providing for a transition period," explained Markovy.
The draft guidance suggests NFTs, in-game assets and memecoins are not financial products — the local equivalent of a “security” — while a yield-bearing stablecoin or a gold-backed token probably are.
The Treasury statement also highlighted issues with debanking. Lam said that simply regulating the industry would go a long way toward solving the issue.
“What we really want from governments and regulators is that clean licensing framework, because that goes a long way to mitigating the risk and giving the banks the comfort that they need,” she said. “And then, there’s probably going to need to be some additional guidance given to banks.”
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US Bitcoin ETFs bought 6x more than BTC miners produced last week
A whopping 18,644 Bitcoin were scooped up by ETFs in the US over the past week, while only 3,150 BTC were mined.
US Bitcoin ETFs bought 6x more than BTC miners produced last week
Spot Bitcoin exchange-traded funds (ETFs) in the United States bought up nearly six times as many Bitcoin as were produced by miners over the last week.
The US-based Bitcoin
BTC
$94,706
funds bought a whopping 18,644 Bitcoin over the past week when only 3,150 BTC were mined for the period, reported asset allocator HODL15Capital on May 4.
This accumulation by institutions and ETF issuers represents almost six times the amount of the asset being produced since miners only generate 450 coins per day.
The total inflow for the past five trading days was around $1.8 billion, with a net outflow on April 30, according to Farside Investors. There has only been one outflow day since April 16, as the inflows have mirrored market recovery.
Last week’s accumulation followed an increase in BTC spot prices in early May when the asset gained 4% to reach a six-week high of $97,700 on May 2. However, the asset has since retreated to the $94,000 level, which is the same price it traded at this time seven days ago.
Spot Bitcoin ETF flows. Source: Coinglass
BlackRock’s iShares Bitcoin Trust (IBIT) is the industry leader, having seen almost $2.5 billion in inflows over the past five trading days and a streak of 17 days without an outflow.
“Spot Bitcoin ETFs have surged into a nearly $110 billion category, despite facing significant distribution hurdles,” said ETF Store president Nate Geraci in a blog post on May 3.
He added that many wealth management platforms still restrict or prohibit financial advisers and brokers from recommending or providing access to Bitcoin ETPs.
“That’s why I’ve said spot bitcoin ETFs are operating with one hand tied behind their backs. Imagine what might happen as these restrictions are lifted.”
Litecoin ETF decision due
Meanwhile, the Canary Capital spot Litecoin (LTC) ETF filing is due for a second deadline decision from the US Securities and Exchange Commission by May 5. The issuer filed for a spot Litecoin ETF alongside a spot XRP ETF in October.
“If any asset has a chance of early approval, it’s Litecoin IMO,” said Bloomberg ETF analyst James Seyffart on May 5. “Personally think a delay is more likely,” he added. Fellow analyst Eric Balchunas echoed the sentiment earlier this year.
More than 70 US crypto ETFs are awaiting an SEC decision this year, Bloomberg reported in April.
Magazine: Bitcoin to $1M ‘by 2029,’ CIA tips its hat to Bitcoin: Hodler’s Digest.
