The crypto landscape in Australia has been more volatile than Bitcoin itself over the past year or two. It all began with the debacle surrounding the FTX collapse last year. Australia’s Big Four banks started shifting uneasily from foot to foot and when one started to impose restrictions on transactions to and from crypto exchanges, it was inevitable that the rest would be rapid to follow suit.
Some financial commentators were surprised at the lack of a stampede at that point, but as a nation, Australians are not easily spooked, and as we will see in a moment, many of those who hold crypto have their own ideas on how best to use it. Still, when the Australian government waited almost two years for a bill on crypto regulation to be put before the senate and then rejected it having barely had time to read it, even the most optimistic crypto enthusiasts could see that a regulated crypto market was still some way off.
The latest proposal from the Australian treasury that crypto exchanges and platforms will be subject to the same financial rules as other financial instruments represents a huge step forward in crypto regulation.
A little background – crypto speculation and casino gambling
Australia is formally labelled as crypto-neutral. But there are two important things to understand about that definition. The first is that this describes the nation’s attitude to crypto in terms of government, regulators and the banking community. It does not necessarily reflect the viewpoint of the wider population. The second is that the label in question is likely to be lifted and replaced with something a little more positive now that the government is initiating action.
Australians as a nationality tend to be early movers when it comes to new tech. This was demonstrated with the internet revolution and then again with smartphone adoption, both of which happened faster than in North America and Western Europe. The same is happening with crypto, where data from Finder shows that 18 percent of people own crypto, the third highest uptake rate in the world.
The Australian fondness for a gamble is responsible for this in two ways. First, speculating on crypto exchanges is a gamble in itself. History has shown that the volatility of Bitcoin and Ethereum provides the potential for fantastic gains or catastrophic losses. But also, Australians are increasingly using crypto for literal gambling.
We’ve all seen the dozens of online casino platforms advertising their wares, and in the Australian market more of these than ever are accepting Bitcoin. When review sites like CasinoAus describe the different casino platforms on their sites, they don’t just talk about the choice of casino games or the top casino bonuses Australian players can win. There is just as much focus on whether the casino operators accept Bitcoin. Not only are transactions fast and secure, but there is also the fact that punters can avoid the potential complications of transacting with online casinos through their banks.
Aligning crypto with fiat transactions
After all the negativity and false starts, Australian treasurer Jim Chalmers presented in a proposal paper that crypto exchanges and online platforms for the trading of digital assets should be subject to Australia’s existing financial services laws. Such platforms would also be required to hold an Australian financial service license.
If passed into law, the rules will apply to any platform that either holds assets worth $1,500 or more belonging to any one individual or $5 million in aggregate.
In a not-so-oblique reference to what happened to FTX, Mr Chalmers referred to “collapses of digital asset platforms, both locally and globally” and said the reforms would seek to “reduce the risk of these collapses happening” by raising the standard of operations and increasing their oversight and accountability.
Consultation on the paper is ongoing with a view to legislation being drafted some time in 2024.