Charting a path forward for Crypto regulation in Australia vital: Kraken

Kraken’s managing director for Australia, Jonathon Miller, says Aussies love crypto, with nearly one in every four Australians having owned cryptocurrencies.

That’s the highest adoption rate globally.

“Despite this rapid embrace of blockchain technology, we have been behind the curve to implement a regulatory framework that will govern digital assets for the long term,” said Miller.

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“While interest in digital assets in Australia and around the world has rebounded, a lack of clear regulation could see us fall behind leading financial markets like Singapore, Europe and the UK.

“Regulation, when done right, provides entrepreneurs and established industry players a rule book they can refer to when making decisions, gives investors a better idea of what crypto projects to invest in and protects consumers from unscrupulous practices.”

Shaping digital asset regulation

So, what does good regulation look like?

“Earlier this year, Kraken was invited to collaborate with other leading experts in Australia’s blockchain and digital asset industry to develop a set of recommendations for how a regulatory framework could function,” Miller said.

“Here are some of the key takeaways from this work (at the Custody and Asset Management Roundtable) which form the basis of what Blockchain Australia will be advocating for as we seek to develop a fit-for-purpose regulatory framework.

Resolve debanking of Crypto businesses

“One of the most frustrating things individual investors face is unwarranted service refusals from traditional finance players, and this also affects confidence in the commercial side of the digital asset sector,” Miller said.

“Blockchain Australia recommends creating a standard framework for banks to assess risks when dealing with crypto businesses, inspired by successful models like Hong Kong’s, in order to bring more confidence and certainty to transactions between crypto and fiat currencies.”

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Information sharing and scam mitigation

Miller said that to tackle scams, there need to be improved information sharing pathways between banks, digital asset exchanges (such as Kraken), and regulatory bodies.

“Establishing industry wide standards for scam prevention through the use of advanced analytics helps protect consumers and encourage safer crypto transactions,” he said.

Create clear token taxonomy

“Crypto” is shorthand for a very broad spectrum of thousands of assets.

And Miller said developing a clear token taxonomy to differentiate between various types of digital assets would go a long way toward providing clarity to help investors make informed decisions as they navigate the crypto market with more confidence.

Consumer education programs

“As an industry, we have much more educational work to do than just highlighting how to avoid scams,” said Miller

“Launching comprehensive consumer education programs that cover all aspects of digital assets shouldn’t just be an aspiration, it should be table stakes for any crypto business.

“These resources need to be accessible to a broader audience base, including stakeholders, institutional audiences, and individual investors.

“By developing a central hub for accurate educational materials and aligning them with industry needs, we can bridge the knowledge gap and drive greater crypto adoption.”

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Simplify tax treatment for cryptoassets

Miller said that crypto adoption was being held back by people not understanding tax obligations when they trade or transact with cryptocurrencies.

“Simplifying the tax reporting and compliance processes for crypto assets will go a long way towards setting expectations with the crypto community,” he said.

“Clearer tax classifications and a standardised reporting process would make it easier for everyone to meet their tax obligations without confusion.”

Custody

“We advocate for clear regulations on custody, focusing on regulating entities that have direct control over consumer assets,” Miller said.

“ A flexible and adaptable regulatory approach that differentiates between direct and indirect control of assets will ensure that custody practices keep up with technological advancements and continue to protect consumer assets effectively.

A path forward

Miller said the blockchain industry, despite its increasing popularity, was still a nascent one – particularly in comparison to traditional finance.

“Regulation that protects consumers whilst also enabling market competition and innovation is a difficult balance, but will be vital as the economy becomes even more digital,” he said.

“Slow action or the wrong approach from policymakers could risk capital flight and see Australia lose leadership in a market that is set to be worth $3 trillion in global trade by 2030. “There’s a lot at stake – and Kraken is proud to be a part of helping the industry grow in Australia.

This content first appeared on stockhead.com.au

The views, information, or opinions expressed in this article are solely those of the interviewee and do not represent the views of Stockhead. Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article. 

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Originally published as Charting a path forward for Crypto regulation in Australia vital: Kraken