Bragg pushes for ‘comprehensive’ crypto law package

Denham Sadler
National Affairs Editor

A “comprehensive legislative package” will be considered as the federal government continues to progress a series of reforms surrounding the regulation of cryptocurrency in Australia.

Liberal Senator Andrew Bragg, who chaired a Select Committee which delivered a report detailing potential reforms last year, said in a speech on Monday that he will be pushing for foundational legislation to cover digital assets.

The government on Monday also released terms of reference for the Board of Taxation’s review of cryptocurrency policies and opened consultation on a new licensing framework for digital currency platforms.

Andrew Bragg
Liberal Senator Andrew Bragg

No cryptocurrency reforms will hit Parliament before the federal election in May, but the Select Committee’s report on the matter had bipartisan support.

The federal government responded to the recommendations in the crypto report in December last year as part of announcing the “most significant reforms” to Australia’s payments system in 25 years.

The Coalition agreed to consult on regulating cryptocurrency exchanges, the feasibility of establishing a retail central bank digital currency and the buying and selling of cryptocurrencies.

The Board of Taxation was also tasked with advising on how digital transactions and assets should be taxed.

Several of these consultations have now been launched, with Treasury opening its look into a new licensing and custody regime for cryptocurrency asset secondary service providers, and terms of reference released for the Board of Taxation’s review.

Senator Bragg welcomed this progression in a speech at Blockchain Week 2022, but urged the federal government to go further and consolidate these reforms into a comprehensive legislative package, known as the Digital Services Act.

“To do this would make Australia one of the only jurisdictions confronting this issue head-on, signalling that we fully appreciate the promise and potential of blockchain technology,” Senator Bragg said.

This Act would be guided by four principles: technology neutrality, broad and flexible approaches, regulation made by a Minister not be agencies and cooperation within government.

The Board of Taxation review should also be used as an opportunity to look at broader tax reform, Senator Bragg said.

“We are applying the tax system to a new and emerging realm, conducting a root and branch examination of the existing system,” he said.

“The conceptual framework that this process will produce is a once-in-a-generation opportunity to clean out our regulatory settings.”

The Board of Taxation will be looking at how digital assets and transactions are taxed in comparable countries, and how Australian rules should be changed.

Treasurer Josh Frydenberg has told the Board that this process should not lead to an increase in the tax burden.

“Our position is clear: to provide greater certainty and confidence, not increase the overall tax burden,” Mr 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.”

Treasury will be consulting on a new licensing and custody regime for cryptocurrency exchange platforms until the end of May.

The objectives for this are to ensure that the regulation is fit for purpose, that it creates a predictable, light-touch legal framework, avoids undue restrictions and harnesses the power of the private sector.

The proposed new framework will include minimum standards of conduct, including for the custody of private keys and the suitability of key persons to be operating the businesses.

Do you know more? Contact James Riley via Email.

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