Described as a “crypto winter” by some within the industry, the crypto market value has crashed from $US2 trillion in April to less than $US885 billion this month after years of apparent wealth creation.
But while cryptocurrencies like Bitcoin and Ethereum continue to slip further, Australia’s financial regulators have reassured citizens that the reforms prepared for by the previous government are not dead in the water.
In their quarterly statement, the Council of Financial Regulators discussed recent developments related to crypto-assets such as the recent price volatility and the increasing number of scams associated with crypto assets.
Regulators have agreed that it was important to establish a robust regulatory framework that will protect investors and guard against potential financial stability risks during the “crypto winter”.
While a landmark Digital Services Act for crypto market licensing, custody of assets, taxes and other key reforms was proposed earlier this year by Liberal senator Andrew Bragg, the bill has not been officially introduced to parliament.
The Council of Financial Regulators also discussed the increasing interest by industry participants in the issuance of Australian dollar stablecoins and the regulatory implications.
Treasury had recently completed public consultation on the licensing of crypto asset secondary service providers and the possibility of incorporating payment stablecoins into the proposed framework for regulating stored value facilities were highlighted.
Banks are keen to use the form of digital coin, which can be linked to a real asset such as the Australian dollar, as a new way to store value and settle transactions.
De-banking, where banks refuse to run accounts for businesses seen as more risky, was the other main issue discussed in the quarterly statement.
Research by Australia’s financial intelligence agency showed that businesses impacted by losing or having limited access to banking services have expanded over the past decade.
Financial technology start-ups, money transfer firms, digital currency exchanges and not-for-profit organisations have been facing bank account closures.
Regulators said advice on how banks’ risk aversion might be addressed, along with ways to make them explain their decisions to close accounts, will be provided to the Australian Government in August.
The quarterly assessment also revealed the successful pilot of Cyber Operational Resilience Intelligence-led Exercises (CORIE) by agencies and a number of financial institutions, with plans for the wider roll-out of the testing program. The revised framework will be published on the Council’s website in July 2022.
With AAP