Government’s move to regulate crypto positive for investors: UNSW Business School

The Australian government’s recent move to regulate crypto is a positive step for investors according to Professor Barney Tan, head of the School of Information Systems and Technology Management at UNSW Business School.

Australian Treasurer Jim Chalmers recently announced the move to token map crypto assets as part of the government’s cryptocurrency reform agenda.

According to Tan, “This is about regulating the 'Wild Wild West' and protecting investors from themselves, even as they are joining what they see as the gold rush on the cryptocurrency exchanges.” 

Some of the beneficial impacts of the regulation that Tan pointed out include a framework for equal taxation, fraud prevention and investor protection.

“It also could help when it comes to anti-money laundering (AML), engaging in counter-terrorism financing (CTF) and preventing other financial crimes,” he said.

“When it comes down to it, the recommendations of the Senate Select Committee on Australia as a Technology and Financial Centre that were released late last year [and the Treasury are now acting on] are aimed at striking a balance between encouraging technological innovation and progress and safeguarding Australian consumers of those innovations.” 

While not much will change for owners of established crypto assets that have already been regulated and taxable, Tan said it is the emerging forms of crypto that the token mapping with affect.

“The planned token mapping means that new and emerging forms of crypto assets can be identified, and the government can determine if our existing financial services laws are adequate, or if they require their own special cryptocurrency regulation," Tan said.

"The government doesn’t want crypto assets that fall through the cracks in our current regulatory framework.” 

The regulations are also expected to impact service providers, digital currency exchanges and crypto issuers.

“They will have to offer more transparency about the crypto assets they are offering,” said Tan. 

“Their revenue may also be affected on two fronts – the market may be cautious about investing in those crypto assets, and the increased regulatory scrutiny may mean that some of their existing revenue streams are simply no longer viable.” 

While Australia is the first country to take this step, it follows a precedent for the nation in establishing regulations for new technologies.

“We are one of the first countries to develop an AI ethics framework that provides guidelines on designing, developing, integrating or using AI systems, and the first in the world to exclude ‘high risk vendors’ from 5G, as a response to security advice,” he explained.

“As a world first, other countries will likely be looking closely at the outcome of this exercise. But in some, less crypto-friendly jurisdictions where crypto assets are banned outright, there is no need to token map as there is already a blanket ban in place.”