Australian regulations on blockchain and cryptocurrencies could soon be subject to changes. Senators are putting forward proposals that should help develop the sector.
Australia and cryptocurrencies: reforms needed
On October 20, 2021, an Australian legislative committee dedicated to new technologies (the Senate Committee on Australia as a Technology and Financial Center, to be precise) issued a report containing 12 proposals aimed at a complete overhaul of the legislation on crypto-currencies and their specific licenses, as well as the tax regulations in the country. Current Australian law considers crypto-currencies as an asset. Investors must pay capital gains tax and declare cryptocurrencies held for more than a year to the Australian tax office.
The commission wants the regulatory framework to be adapted to current realities. Its chairman, Senator, Andrew Bragg, thus stressed that:
“The market demands regulation, and we are responding to that while trying to avoid trampling on innovation.”
Bragg had sought redditors’ views on regulatory reforms for blockchain and cryptocurrencies 3 months before the commission issued its proposals:
“What are the policy proposals you would like to see? What obstacles stand in your way? What reforms would bring the greatest benefit to this sector?”
Towards legal recognition of DAOs in Australia?
The commission’s recommendations are aimed at creating jobs and retaining talent in the blockchain and cryptocurrency space in Australia, attracting investors, and sparking innovation in the country. They include updating the tax law, but also the possible creation of a new corporate entity to register decentralized autonomous organizations (DAOs) in Australia:
“DAOs clearly do not fall under any of the existing Australian corporate structures. [… This regulatory uncertainty prevents significant projects from being set up in Australia.
Bragg had actually spoken highly of Wyoming’s blockchain and cryptocurrency legislation on Reddit, while referring to the US state’s DAO initiative:
The key point here is regulatory arbitrage. We want innovation to be legitimized by a non-stifling regulatory approach. Do you think Wyoming’s DAOs are a good idea?
One of the heads of Queensland Investment Corporation (QIC), Australia’s fifth-largest fund, had previously indicated the importance of mature regulation and infrastructure to encourage large pension funds to gain exposure to cryptocurrencies. The senators took a step in that direction in their desire to update the regulatory framework for an industry an emerging sector.