The Senate Committee on Australia as a Technology and Finance Center (ATFC) has just submitted its third and final report to Parliament, containing 12 far-reaching recommendations for regulating the digital assets and fintech industry.
It introduces new licenses for cryptocurrency exchanges, new laws governing decentralized autonomous organizations (DAOs), a capital gains tax review in decentralized finance (DeFi), and tax credits for crypto miners using renewable energies.
Overall, the report showed that there is a need for greater clarity and security in regulations while avoiding suppressing innovation through onerous requirements.
The main recommendation is the creation of a new DCE marketplace license for cryptocurrency exchanges, including requirements regarding capital reserves and auditing. Requirements must be scalable so that small players are not forced out of the market.
He also recommended updating the capital gains tax rules to bring more clarity to the crypto tax regime and DeFi efforts. The commission suggested that, unlike the current system, capital gains tax should only be applied when cryptocurrency transactions “really result in clearly identifiable capital gains or losses.”
The committee also recommended that the Treasury conduct an analysis of the central bank’s digital currency feasibility policy and propose a corporate tax deduction of 10% for crypto miners using renewable energies.
A world-leading recommendation is the creation of a new DAO regulatory framework that addresses decentralized community ownership and protocol governance. Remember the reports:
“It is clear that DAOs do not fit into any of the existing corporate structures in Australia. […] Regulatory uncertainty prevents the creation of large projects in Australia.”
Asher Tan, CEO of Australian crypto exchange CoinJar, praised Committee Chair Senator Andrew Bragg and the team for the “forward-looking approach they have taken with this proposed regulation.” He said:
“In our view, the AFTC report has a commendable upbeat tone as blockchain technology is seen as the historic innovation that it represents, with associated opportunities and risks.”
The panel heard input from a number of experts and industry players, including Blockchain Australia, leading exchanges, and companies such as R3 and Ripple. The latter recommended that any regulatory framework use a “risk-based approach to identify digital asset services that pose sufficient risks to justify regulation.”
Steve Wallace, CEO of Blockchain Australia, said the organization would like to hear feedback from stakeholders on the guidelines.
Senator Bragg said the proposed rules will help Australia become a leader in digital assets:
The panel recommended a comprehensive crypto framework to secure Australia’s leadership. We want to be competitive with Singapore, UK and USA. ”
On the topic: The average Australian cryptocurrency portfolio has grown by 258% in fiscal year 20-21, the survey shows.
The Australian Internal Revenue Service estimates that more than 600,000 taxpayers have invested in digital assets in recent years. Independent research shows that 17% of Australians currently own cryptocurrency.
The report concludes that strong regulations are needed to protect consumers, encourage investment in Australia, and maintain global competition:
“The potential economic opportunity is enormous if Australia can create a promising environment for new and emerging digital asset products.”