Australia Plans to Create a Licensing Regime for Crypto

December 9, 2021

On December 8, 2021, Australia’s Treasurer, Hon. Josh Frydenberg, delivered an address to the Australia­-Israel Chamber of Commerce in Melbourne, Australia, on the subject of “Transforming Australia’s Payments System.”

Treasurer Frydenberg described that “COVID has accelerated and changed the way Australians and businesses engage with digital technologies” and that “[n]owhere is this digital disruption playing out faster than in the payments and crypto‑asset sectors.”

In describing the “Reform Plan”, he described that:

Our reforms will progress in two phases, with the most urgent and immediately implementable changes being consulted upon in the first half of 2022, and the remainder by the end of 2022.

The Government will commence consultation on the feasibility of a retail Central Bank Digital Currency in Australia, with advice to be provided by the end of 2022.

In relation to payments, by mid‑2022 the Government will have:

– Set out a strategic longer‑term plan for the payments system, developed with industry and reviewed annually.
– Settled the details of additional powers for the Treasurer to set payment system policy.
– Determined the changes necessary to modernise payments system legislation to accommodate new and emerging payment systems, including consideration of BNPL and digital wallets.

In relation to crypto, by mid‑2022 the Government will have:

– Completed consultation on the establishment of a licencing framework for Digital Currency Exchanges to provide greater confidence in the trading of crypto assets.
– Finalised consultation on a custody or depository regime for businesses that hold crypto assets on behalf of consumers so that investors have greater confidence in the safe keeping of these assets.
– Received advice from the Council of Financial Regulators, working with other relevant agencies, on the underlying causes and policy responses to the complex issue of de‑banking.

Importantly, by end‑2022 the Government will have:

– Settled the framework to replace the current one‑size‑fits‑all payment licensing arrangements with a functionally based framework adopting graduated, risk‑based regulatory requirements.
– Received a report from the Board of Taxation on an appropriate framework for the taxation of digital transactions and assets.
– Undertaken a mapping exercise of existing crypto currencies and tokens to better inform consumers and others of the risks and benefits that arise.
– Examined the potential of so‑called Decentralised Autonomous Organisations (DAOs) and how they can be incorporated into Australia’s legal and financial regulatory frameworks.

Dec. 8, 2021 Address to Australia­-Israel Chamber of Commerce, Melbourne

Hon. Josh Frydenberg’s address to the Australia­-Israel Chamber of Commerce in Melbourne, Australia, on the subject of “Transforming Australia’s Payments System” can be accessed here.

Additional comments from Treasurer Frydenberg can be seen here.