Australia’s Crypto Industry Backs Draft Legislation but Calls for Greater Clarity

Australia’s crypto sector has largely supported the government’s draft crypto legislation released last month. However, industry players have responded to the Treasury’s consultation with calls for additional clarity on key issues.

“The draft legislation, as it stands, leaves some critical questions unanswered,” said Caroline Bowler, former CEO of crypto exchange BTC Markets, in a statement. “We support the government’s intent to bring structure to the digital asset sector. But structure must come with clarity.”

### Treasury Consultation on Extending Finance Laws to Crypto

On Friday, the Treasury concluded a consultation that began in late September regarding draft rules that extend finance sector laws to crypto exchanges. The proposed law aims to create two new financial products under the Corporations Act: a “digital asset platform” and a “tokenized custody platform.” Both would require an Australian Financial Services License and registration with the Australian Securities and Investments Commission (ASIC).

### Swyftx Calls for Simplification and Clearer Powers

In its submission to the Treasury, crypto exchange Swyftx emphasized the need for the draft law to be “simplifying and clarifying,” particularly around the powers it grants the government and how exchanges can operate.

The company warned that the draft law allows “a high degree of discretion” by the Treasury and could enable regulators to “impose fundamental changes.” Swyftx recommends including a guiding statement for future regulatory interpretation and clearer definitions regarding the powers of the Treasury and ASIC to designate platforms and set minimum standards.

### Industry Sees Progress but Notes Critical Details Missing

Mandy Jiang, Executive Director and Financial Chief at blockchain firm CloudTech Group, described the draft laws as a “significant step forward” but noted that many critical aspects—such as licensing and custody standards—are delegated to ASIC to address later.

“Whether this legislation achieves its stated objectives of fostering innovation and supporting sectoral growth and competition will largely depend on the timeliness and quality of ASIC’s forthcoming guidance,” Jiang added.

### Additional Concerns Raised by Crypto Exchanges

Swyftx further highlighted that the laws lack clarity on how Australian crypto platforms can legally source liquidity from offshore exchanges, an issue vital for ensuring “a level playing field with international markets.”

The company also expressed concern that licensed financial advisers would only be allowed to advise on regulated platforms offering crypto, rather than on cryptocurrencies themselves.

Jason Titman, CEO of Swyftx, told Cointelegraph: “We support the approach of regulating crypto under financial services law, but our main concerns right now are to ensure Australian consumers are appropriately protected and that the local industry can compete on a level playing field.”

Caroline Bowler pointed out contradictions within the draft legislation, particularly regarding how to determine if a cryptocurrency is not a financial product and how a platform can be treated as a financial market without trading financial products.

She added that the laws introduce multiple licenses without clearly explaining the consumer benefit or the specific risks they aim to address.

“Regulation should be proportionate and fit for purpose. Without that, we risk building a regime that is burdensome for businesses but does not necessarily enhance consumer protection,” Bowler emphasized.

### Timeline and Industry Expectations for Legislation

Vakul Talwar, General Manager for Crypto.com Australia, urged the Albanese government to maintain momentum and work to amend and introduce the bill “as quickly as possible,” predicting legislation could be passed as early as March 2024.

He also suggested the bill is unlikely to face significant delays due to bipartisan support. “We would like to see legislation finalized as soon as possible and, in our opinion, this certainly needs to happen by the end of 2026,” Talwar added.

Edward Carroll, Head of Global Markets at crypto investment firm MHC Digital Group, offered a more conservative outlook. “The reality is that we probably won’t see legislation introduced before the end of 2026,” he said.

“There’s still meaningful work to be done translating consultation feedback into a workable bill, but the sooner the rules are formalized, the sooner businesses can plan with confidence,” Carroll concluded.
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