To encourage digital and crypto asset enterprises to set up operations in Australia. A Senate panel has suggested reforms to taxation rules, licensing, and regulatory regimes. The Select Committee on Australia as a Technology and Financial Centre was to investigate measures to regulate cryptocurrency. Including also digital assets, which are currently unregulated.
New market licensing frameworks for digital currency exchanges (DCEs), custodial and depository services. It also includes the digital and crypto asset Modifications to anti-money laundering and counter-terrorism financing rules to make them “fit for purpose”. Were also among the committee’s 12 recommendations.
Despite the fact that some exchanges handle billions of dollars in deals each year. The crypto and digital assets business had no regulatory oversight, according to the study.
Currently, the sole need to run a DCE is to register with AUSTRAC, which the inquiry described as “soft touch”. AUSTRAC does not protect investors.
The Industry’s Demand
Given industry demands to abolish CGT for digital currency transfers, the committee proposed that CGT be imposed only “where there is a clearly discernible capital gain or loss.” But it didn’t say what the tax threshold should be.
There was also a proposal for a 10% tax break for enterprises who “mine” cryptocurrencies using renewable energy. They also generated themselves.
The committee is chaired by Liberal Senator Andrew Bragg. According to him, these suggestions are well-balanced in that they encourage innovation while still protecting customers.
Despite the impending federal election, Senator Bragg stated that the ideas should enacted within a year.
“I’m concerned about brain drain and the loss of good people,” he stated. Noting that “Australian crypto marketplaces are already pursuing licenses offshore.”
Light on Detail
The report, according to Aaron Lane of the RMIT Blockchain Innovation Hub, is forward-thinking and a crucial first step.
“The more we wait, the more we lag behind, particularly in US-style crypto-friendly jurisdictions like Singapore,” Dr Lane said.
“There is a sense of urgency.”
According to Norton Rose Fulbright’s Nick Abrahams, the report was lacking in depth.
“The study did not go into enough detail about how to regulate digital assets… And thus the report effectively kicked the can down the road by stating that [it] will be a token mapping effort “he stated.
Implementation of Regulatory Change
“It feels like we’re staring in the rearview mirror when we should be looking through the windscreen during a token mapping session.”
Mark Carnegie, a venture capitalist, praised the report but expressed reservations about whether its recommendations would executed.
“The pace with which we’re attempting to achieve regulatory reform and the speed. With which this technology in this environment is moving are just from different worlds,” he said.
DAOs are a Game-Changer
The committee’s recommendation that the federal government build a new decentralized autonomous organization business structure excites the industry the most.
“This is a significant issue. These will be the most important changes to company law in two decades if they become law “Dr. Lane explained.
Unincorporated associations, syndicates, and common law partnerships are all examples of DAOs. When the actions and investments coordinated by code or smart contracts.
Other Blockchain Projects
DAOs and other blockchain projects with decentralized governance systems are currently not recognized by Australian law as existing regulatory categories.
The recognition of DAOs, according to Caroline Bowler, CEO of digital currency exchange BTC Markets, will be a game-changer for the sector.
DAOs, according to Ms Bowler, are the foundation of Defi, or decentralized finance.
This year, Wyoming became the first state in the United States to recognize DAOs, and it has quickly become a hotbed for digital asset enterprises.
“DAOs are a completely new way of thinking about organizational structures, a whole new paradigm. It is a huge undertaking for Australia to take on this, “she stated.