A welcome step in crypto-asset regulation: Treasury token mapping and ASIC Corporate Plan

By John Bassilios 

In a joint media release, the Federal Government has acknowledged the need for regulatory reform to address the ever-increasing use of crypto-assets.

The Government will engage in stakeholder consultation to address deficiencies in the existing regulatory and licensing frameworks to protect consumers while encouraging innovation.

This step towards greater certainty is welcomed by the crypto industry, which has endured a lack of regulatory guidance despite crypto-assets growing in popularity over recent years. Good regulatory reform in this area will improve confidence for industry participants and enhance investment and innovation in the crypto-asset sector. However, the challenge for the Government will be attaining a balanced regulatory framework that provides sufficient certainty and consumer protections without being overly prescriptive.

As a first step – and in a world first – the Government has committed to a ‘token mapping’ exercise to identify how crypto-assets and services should be regulated. The willingness to conduct a ‘token mapping’ exercise in Australia was initially reflected in the previous Government’s response to the final report of the Senate Select Committee on Australia as a Technology and Financial Centre in December 2021. The Government will release a public consultation paper on token mapping soon.

The Australian Securities and Investment Commission (ASIC) has also committed to supporting the development of an effective regulatory framework for crypto-assets in its Corporate Plan for 2022-2026. ASIC’s Corporate Plan designates ‘crypto-assets’ as a core strategic project and commits to the following actions:

• taking enforcement action to protect consumers from crypto-assets;
• assessing disclosure documents such as product disclosure statements and target market determinations for major crypto offerings;
• monitoring the regulatory model for exchange-traded products with underlying crypto investments; and
• raising public awareness and collaborating with other bodies to develop coordinated responses and policies in response to the inherent risks associated with crypto-assets and decentralised finance.

While the Treasury release is a welcome announcement and likely allays fears that a Labour Government would regulate all crypto-assets as a financial product, it is unlikely that Australia will take a regulatory lead and is more likely to follow international developments.