The Australian Senate's Select Committee on Australia as a Technology and Financial Centre (ATFC) has today presented its final Report outlining its recommendations for a clear regulatory framework for the Digital Assets sector in Australia.
The report includes a total of 12 recommendations, including the establishment of legal structures to recognize decentralized autonomous organizations ().
The Select Committee on Australia as a Technology and Financial Centre has presented its final report https://t.co/x7bxPRUNMm
— Australian Senate (@AuSenate) October 20, 2021
Based on advice from crypto firms and organizations including Swyftx, Ripple, R3, and Blockchain Australia, the authors of the document stressed that "any future regulatory framework should be technology-agnostic, and should not explicitly or otherwise endorse any particular technology."
In practical terms, this means that financial services using Digital assets should not be treated differently from traditional financial services.
"We propose that the Australian government aligns digital asset regulations with requirements imposed on the same asset in its traditional form, with the principle of 'same risk, same activity, same treatment'," an R3 proposal reads.
One notable recommendation calls for the Australian Government to establish a new structure for decentralized autonomous organizations that would be recognized by the Corporations Act.
A DAO is a management structure designed to replace a traditional hierarchical layout with a new type of governance model based on, in which participants are assigned voting rights based on their ownership of governance tokens.
Some jurisdictions have already started to develop legal structures for DAOs, with Wyoming becoming the first U.S. state to recognize DAOs as a legal entity in July 2021.
New licensing regimes
Other key proposals in the report include the establishment of new licensing regimes for crypto exchanges and custody providers, as well as a detailed “token mapping” exercise to classify digital assets in the best possible manner.
Additionally, the report highlights the need to ensure that current Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations "do not undermine innovation," and that the Capital Gains Tax (CGT) regime be amended in such a way that "digital asset transactions only create a CGT event when they genuinely result in a clearly definable capital gain or loss."
The report also recommends a company tax discount of 10% on cryptocurrency mining operations if miners source their own renewable energy for these activities, and the elimination of de-banking, or the practice of banks closing the accounts of businesses they perceive to be high risk.
An agenda for Australian leadership on cryptocurrency: the final @AuSenate Committee report has been tabled.
Media release: https://t.co/LOuM9dY4so
Report: https://t.co/TJi5pwEHj8 pic.twitter.com/XFSOE2wNdh
— Senator Andrew Bragg (@ajamesbragg) October 20, 2021
If approved, this comprehensive crypto framework "will drive investment and jobs into Australia" and ensure the country’s leading roles in the digital assets space, Andrew Bragg, a Liberal Party senator and chair of the committee, said in a statement.
"Australia can be a leader in digital assets. This means Australians can access new choices and lower prices. It means Australians can have more control of their financial destiny rather than being dependent on endless intermediation," said Bragg.
The authors of the report also noted that the above recommendations are becoming even more relevant considering that Australia is “one of the world's most significant adopters of cryptocurrencies on a per capita basis.”
The report cites survey data showing that 17% of Australians currently own cryptocurrency, with a further 13% of respondents planning to buy digital assets in the next 12 months.
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