The Australian government has doubled down on its commitment to a strong regulatory framework for crypto following the catastrophic collapse of FTX last week.
A spokesman for Australian Treasurer Jim Chalmers said the Treasury had said it was now planning regulations to improve investor protection next year, according to a November 16 report from the AFR.
The spokesperson made the announcement in light of FTX’s fall last week, saying he was closely monitoring the fallout from the FTX collapse, “including increased volatility in crypto-asset markets and any spillover into financial markets more broadly,” adding:
“These developments highlight the lack of transparency and consumer protection in the crypto market, which is why our government is taking steps to improve regulatory frameworks while promoting innovation.”
The call for accelerated regulation comes as 30,000 Australians and 132 businesses were victimized at The Fallen Empire of Sam Bankman Fried.
Michael Bacina, a digital asset specialist at Piper Alderman’s attorneys, told Cointelegraph that regulation is the only way forward to restore much-needed trust in trading platforms:
“Regulatory certainty is key to restoring trust in centralized exchanges, and while the law cannot eliminate bad behavior, it can establish powerful norms and standards that make it easier to detect such behavior.”
While Danny Talwar, tax manager at crypto tax platform Koinly, added that a strong regulatory regime could close the loopholes where retail investors need to be exploited:
“FTX’s fallout sequel highlights the need for sensible regulations in the crypto world, both domestically and across the globe, to remove uncertainty and remaining gray areas and clarify assets especially for retail consumers.”
“[But] the challenge will be to ensure that regulation acts as intended to effectively protect consumers without suppressing industry growth,” he added.
As for what regulation may entail, Talwar noted that while Australian trading platforms must comply with the Australian Transaction Reporting and Analysis Center (AUSTRAC), recommendations have been put forward to establish a licensing regime. Steps.
The regime would include “capital adequacy and auditing standards to demonstrate the operational integrity” of trading platforms, which Talwar says is of great importance given that many exchanges offer high-end products. return at increased risk in order to gain a competitive advantage.
Bacina also said that the “measured approach” taken by the Australian government could also position the country to become an industry leader in the regulation of digital assets:
“When Australia puts in place custodial rules enabling the technology for centralized holders of crypto assets, we will either be a leader in the field or catch up, depending on how quickly other jurisdictions, like Singapore and Europe, will move to establish rules.”
The Treasury is also looking to provide greater protection for investors by implementing a “token mapping” system, which will help identify how certain digital assets should be regulated, according to an Aug. 22 statement from Assistant Treasurer Stephen Jones.