Australia's Principled and Tech-Agnostic Approach to Crypto Asset Classification...
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Australia’s Principled and Tech-Agnostic Approach to Crypto Asset Classification
Australia’s Treasury has embarked on an innovative project that promises to redefine the handling of digital assets in the country. As one of the leading financial regulators in Australia, the Treasury is implementing a ‘tech-agnostic’ and ‘principles-based’ methodology for the classification of digital assets. As articulated by an official from the Treasury, the intention is to provide a flexible, comprehensive framework that can accurately define the nature and function of crypto-assets.
Crypto-Assets: A New Classification Framework
Assistant Secretary of the Australian Treasury, Trevor Power, conveyed during the Australian Blockchain Week that the newly developed system will categorize tokens based on their underlying purpose and utility. The intention is to devise a framework that is inherently adaptable and forward-thinking.
Power explained the purpose of the approach, stating:
“The token mapping paper focuses extensively on the tokens themselves – their system, their value, and the purpose they serve. The aim is to devise a regulatory structure that draws upon these principles, thereby enabling the appropriate placement and categorization of each token.”
Essentially, the Treasury strives to establish a system indifferent to specific technologies or tokens. It’s more about the underlying principles that govern the operation and utility of these tokens.
Anticipating Crypto Asset Legislation
Power gave insight into the potential timeline for crypto-specific legislation, stating it is “reasonable to predict” that relevant legislation may be introduced by 2024. However, the actual timeline would greatly depend on the reception and approval of the lawmakers in Australia.
Crypto assets that undergo functional changes over time may be subject to re-evaluation under the proposed regulations. Power elucidated, “In cases where they become significant, these tokens may need to progress through the regulatory system.”
The assistant secretary emphasized the need for the token mapping regulation to be “robust” enough to operate in a “tech-neutral” and “principles-based manner”. Such an approach will ensure adaptability in light of the evolving landscape of digital assets.
A Pivot in Financial Regulation
The Australian Treasury views the token mapping initiative as vital for understanding how the crypto-ecosystem interacts with Australia’s existing financial regulatory frameworks. This exercise is independent of any influence from the recent regulatory enforcement actions taken by the United States Securities Exchange Commission (SEC).
The Treasury is optimistic that Australia’s crypto framework will align closer to the European Union’s Markets in Crypto Assets (MiCA) regulation. It signals Australia’s intent to foster an environment conducive to crypto asset growth and innovation, under the purview of the token mapping framework.
Power warmly invites digital asset firms from the U.S. and abroad to consider the Australian market, given their adherence to the token mapping framework. He stated, “The dual objectives of every regulatory component are to establish a sound framework and to ensure there is sufficient room for industry growth and innovation.”
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