Australia’s Senate committee has voted against the proposed Digital Asset (Market Regulation) Bill, which aimed to introduce a licensing system for digital asset exchanges, custody services, and stablecoin users. After months of deliberation, the rejection comes with concerns about the bill’s operational feasibility.
The Economics Legislation Committee, chaired by Labor Senator Jess Walsh, released its final report on Monday, concluding that while the bill’s objectives were commendable, it lacked the necessary detail and interoperability with existing regulations.
The committee expressed concerns that the bill could lead to regulatory arbitrage and potentially harm the cryptocurrency industry.
Introduced by Liberal Senator Andrew Bragg in September of the previous year, the bill drew inspiration from the recommendations of the bipartisan 2021 Select Committee on Australia as a Technology and Financial Centre, which aimed to modernize the nation’s financial services sector. However, since its introduction, the Albanese government has reframed some recommendations.
One of the central issues debated during the inquiry was whether a specialized legislative framework for digital assets was necessary, as opposed to amending existing regulations.
Fintech Australia, among others, raised concerns about the bill’s lack of clarity regarding digital asset exchange requirements, stablecoin governance, and the implementation timeline.
The committee’s decision to reject the bill was based on the consensus that further regulation was required. Still, the current proposal did not provide the necessary level of detail and certainty for investors, consumers, and industry stakeholders.
Senator Bragg’s Crypto Call To Action
In response to the rejection, Senator Bragg criticized the government’s decision to restart the consultation process, asserting that it has exposed consumers to an unregulated market and driven investment offshore. He called for the Senate to take action and pass the bill independently of the government.
However, a dissenting Coalition report suggested that the government had shown little interest in regulating digital assets and expressed skepticism about the possibility of draft legislation within the next year. It pointed to regulatory progress in the European Union and the United Kingdom as examples of successful approaches to cryptocurrency regulation.
However, further consultation on “fit-for-purpose” licensing and custody requirements is expected in the coming weeks, leaving the fate of cryptocurrency regulation in the hands of ongoing deliberations and potential future legislative efforts.
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