He told an audience that the rise of blockchain currencies has been “nothing short of phenomenal.”
Joe Longo, chair of the Australian Securities and Investments Commission, or ASIC, spoke at the Australian Financial Review Super and Wealth Summit on Monday at the Fullerton Hotel in Sydney.
The rise of crypto, he said, has been “nothing short of phenomenal, and impossible to ignore.”
As a corporate and markets regulator, Longo admitted to a certain fascination with decentralized autonomous organizations, or DAOs. He said that they present certain challenges for national regulators like ASIC:
“To paraphrase a concept familiar to corporate lawyers, to whom does ASIC turn to ascertain the directing mind and will of a DAO? It is not clear who is accountable if things go wrong, or don’t go as intended or anticipated. Nor is it clear how a DAO, itself, can be held accountable in a court of law.”
Longo recognized the high consumer demand for crypto products and services in Australia, and noted that ASIC still has important decisions to make with respect to policy on the crypto space, “Wherever we land from a policy perspective […] crypto is on our doorstep, here and now, and being driven by extraordinary consumer and investor demand.”
While his comments included caution for investors, the chair saw that the recent entrance of Commonwealth Bank to the crypto market by offering crypto trading functionality to its app users was an important step to recognize in the evolution of crypto markets:
“The fact [that] Australia’s largest bank is already proposing a means of crypto-exposure for its retail customers is telling. Yes, it’s only a pilot project, but the overall direction is clear. This debate is no longer on the fringes of the financial services industry.”
Australia’s interest in the blockchain space seems to have increased over the course of recent months. On Friday, Nov. 19, the CEO of the country’s Commonwealth Bank said that he is more concerned about missing out on the rise of this nascent technology than with any supposed risks relating to adoption. Back on Nov. 2, Australia’s Senate spoke glowingly of the industry, praising the nation’s crypto advocates for their willingness to embrace regulation.
Kraken Australia’s Managing Director is concerned that a proposed new licensing regime for crypto exchanges could collapse the vibrancy of the industry down under.
With crypto regulation reportedly set to ramp up in Australia over the next 12 months, Kraken Australia’s Managing Director Jonathon Miller thinks that a strict crypto regime could stifle local competition.
The Senate Committee on Australia as a Technology and Financial Center, led by crypto-friendly Senator Andrew Bragg tabled 12 extensive recommendations for regulation of the digital asset and Fintech industry last month. The proposals included a new licensing regime for crypto exchanges, new laws to govern decentralized autonomous organizations (DAOs), and an overhaul of capital gains tax in decentralized finance (DeFi) to name a few.
In an exclusive interview with Cointelegraph, Miller said it was “yet to be seen” if the proposed regulations would have a positive or negative effect on the local sector moving forward, noting that:
“We’ve seen other markets where onerous regulatory regimes have come in and you know, you see a collapse of competition, a collapse of the vibrancy that we’ve got today in Australia.”
“And I hope that doesn’t happen because that will be bad for the consumer in the long run,” he added.
Under the proposed market licenses for Australian digital currency exchanges (DCE), local firms would need to meet strict “capital adequacy, auditing, and responsible person” requirements to obtain a license to operate.
Speaking on the matter, Miller drew comparisons with Japan as he argued that the limited number of options on the market due to the government’s strict licensing requirements which also negatively impact the local consumer.
“[Kraken has] a markets license in Japan, one of the very few crypto companies available to Japanese users. Even though we’re active there and we’re really supportive of that market, I don’t think that’s good for the Japanese people that there are so few opportunities for players in space,” he said.
Caroline Bowler, the CEO of local crypto exchange BTC Markets offered a different take, however, telling Cointelegraph that the incoming crypto regime in Australia will “enhance and enable innovation.”
“The proposal, I feel, had a lot of very forward-looking points of view in it. The talk about DAO’s in particular, that would be extremely innovative from a regulatory point of view for any country, any jurisdiction, anywhere in the world,” she said.
Bowler stated that the “single biggest roadblock” for the firm when exploring expansion opportunities for compliant services and products last year was the lack of crypto-focused regulation in Australia:
“That was causing issues across the business and issues for us to expand and issues for our clients and causing a hesitancy amongst people coming in. We couldn’t offer the full range of what we wanted to offer.”
“And the licensing regime, as it currently existed for traditional markets, was a shoe that didn’t fit. We couldn’t squeeze in,” she added.
Adrian Przelozny, the CEO of Australian and Singapore-based crypto exchange Independent Reserve (IR) echoed similar sentiments to Bowler, noting that the “upside of regulation far outweighs any risks.”
IR became the first Australian crypto exchange to obtain a Major Payment Institution License in Singapore at the start of October. Przelozny suggested that the firm’s registration under the Monetary Authority of Singapore’s licensing regime has significantly improved the IR’s legitimacy in the eyes of its potential partners:
“I can tell you that being in a licensed jurisdiction is much better than being in an unlicensed jurisdiction. And this is because it really changes the conversations that we have with the partners that we get to work with.”
Przelozny highlighted that the “biggest challenge” for crypto firms in Australia is being able to secure good banking relations, with de-banking being a key issue in the local crypto climate. IR’s CEO stated that this may nolonger be an issue once local companies can acquire the appropriate licensing.
“Over in Singapore, as soon as we got the license, we found the banking conversations completely changed and now the banks are approaching us to be their customer,” he said.
The Liberal Party Senator commented that DeFi “presents huge opportunities” for Australia to cement its place as a “front-runner for innovation.”
Senator Jane Hume has stated that decentralized finance (DeFi) “presents huge opportunities” for Australia to cement its place as a “front-runner for innovation and economic progress.”
Senator Hume spoke at the Australian Financial Review Super & Wealth Summit in Sydney on Monday, Nov. 22. She is the Minister for Women’s Economic Security of Australia, representing the Liberal Party and the state of Victoria. The conference was primarily about super and government retirement funds — both notoriously slow and steady investments. The comments on DeFi are more notable in this regard.
Senator Hume called for industry and government to acknowledge that DeFi is “not a fad,” and to “tread cautiously, but not fearfully” because the technology is “not going away any time soon.”
“If the last 20 or 30 years have taught us anything, it’s that all innovation begins as disruption and ends as a household name,” she said. She also referenced the fast-paced nature of the industry:
“Decentralized finance underpinned by blockchain technology will present incredible opportunities ‑ Australia mustn’t be left behind by fear of the unknown.”
Speaking on policy, she noted that Australia’s economic future will be defined by “innovation” and “uptake of technology” as the country continues to recover from the financial toll of the COVID-19 pandemic.
She also commended industry players for “embracing innovation and developments in this space,” particularly around blockchain technology, making specific reference to Commonwealth Bank.
On Nov. 3, the bank announced it will allow the 6.5 million users of its banking app to trade 10 crypto assets including Bitcoin, Ether, Bitcoin Cash, and Litecoin.
“This will make CBA the first Australian bank — and one of just a handful of banks worldwide — to offer customers this sort of access,” she said.
According to Finder’s Crypto Survey of 27,400 respondents, 17% of Australians invest in cryptocurrency. However, the country’s uptake of crypto has seen increasing pressure from lawmakers and regulatory bodies.
Last month, the senate committee of pro-crypto NSW senator Andrew Bragg published its “crypto report,” which made 12 recommendations intended to tackle key issues pertinent to the cryptocurrency sector.
Bragg said that the recommendations will enable Australia to compete with leading jurisdictions for the blockchain and crypto industries, including Singapore, the United States, and the United Kingdom.
Senator Bragg says that his government won’t let Aussie banks to practice anticompetitive de-banking against crypto companies.
Australian banks have been dressing up anti-competitive behavior as regulatory compliance when de-banking crypto customers, Senator Andrew Bragg said.
“I believe many banks have been dressing up de-banking as a regulatory necessity. In fact it is often anti-competitive behavior and far more sinister and threatening than it appears on the surface,” the Liberal Senator for New South Wales said in a prepared address to the Tech Council of Australia tod.
Denial of banking, or debanking, is when a financial institution chooses to no longer offer banking services to a customer. No reason needs to be given, and banks have the ability to freeze an account instantly or shut it down with very little notice. For crypto customers banks often cite concerns around Anti Money Laundering (AML) and Counter Terrorism Financing (CTF) compliance.
Senator Bragg told Cointelegraph that his Senate Committee heard evidence that the banks terminated accounts for “commercial reasons” — a practice “long been known and flagged by the ACCC [Australian Competition & Consumer Commission]”.
“In other words, they debanked customers to protect their entrenched market position. This is not good enough.”
Giving evidence to the Senate inquiry into “Australia as a Technology and Financial Center” in September this year, ‘Bitcoin Babe‘ founder Michaela Juric said that she had been banned by a total of 91 banks and financial institutions throughout her seven-year history in crypto.
“No reasons given, no case-by-case assessments or discussions engaged and no recourse available,” she said at the time.
Another Aussie digital currency trader Allan Flynn won a settlement with ANZ for debanking him on Oct 15. While ANZ denied any liability, the bank offered him a chance to reapply for a bank account. Flynn also has a similar case against Westpac that’s ongoing.
In today’s address to the Tech Council, Senator Bragg condemned the practice of debanking, saying it “undermines Australia as a crypto hub.”
“How can you be a hub if you can’t get a bank account as a trader, miner, exchange, custodian or investor? You can’t.”
Things are changing however. On Nov 3 The Commonwealth Bank announced it will become Australia’s first bank to offer customers the ability to buy, sell and hold crypto assets through its CommBank app. According to Bragg, it will be difficult for banks to reconcile an anti-crypto position as they begin to enter the crypto world themselves.
“The position the banks have historically taken will be hard to sustain with the recent entrance of banks into the crypto world. I will ensure it is not an opportunity for the banks to be hypocrites,” he said at today’s address.
He added to this statement, telling Cointelegraph: “I believe it would be hypocritical to allow and encourage customers to use crypto in the app, and then de-bank other customers for doing the same. I am pleased to see banks getting on board with cryptocurrency”.
The Senate committee’s “Crypto Report” published Oct. 20 made 12 recommendations intended to tackle key issues pertinent to the cryptocurrency sector, including that the Australian government develop a “clear process for businesses that have been de-banked”.
Following the report’s release, the Australian Transaction Reports and Analysis Centre (AUSTRAC) released a statement which strongly criticized de-banking on Oct 29:
“The effect of debanking of legitimate and lawful financial services businesses can increase the risks of money laundering and terrorism financing and negatively impacts Australia’s economy,” the report stated.