Australia’s failure to regulate cryptocurrencies is seeing its access to new financial product waves jeopardised, as jurisdictions from Hong Kong to Nigeria are seeing how web3, stablecoins, and decentralised finance is fitting into digitising economies.
Former international investment banker Loretta Joseph has claimed Australia has “dropped the ball” when it comes to regulating cryptocurrencies, adter Nigeria saw the installation of a legal framework leading to the banning of Binance.
“All this peer-to-peer technology is one big elephant, but many regulators are trying to chop off one ear or the trunk, rather than deal with the whole animal.”
“In Australia, we’ve lost our way, and the focus on scams – which no doubt needs to be stamped out – can only be dealt with by taking the time to understand how this technology works. The peer-to-peer innovation is up and running, and scammers use it the way they’d use any other avenue.”
Loretta is currently in Sydney to launch the Australian Digital Financial Standards Advisory Council, sitting under the ADC Forum.
Joining is SA premier Steven Marshall, former G20 executive secretary of the Financial Action Task Force, Rick McDonnell, and research director of the software and computational systems division at CSIRO’s Data61, Liming Zhu.
“The political will to regulate crypto has fallen away, and that’s understandable following the pandemic, but the regulators need to keep up with technology,” Loretta said.
“All throughout the Commonwealth, we are setting up frameworks with basic requirements and proper penalties, which go a very long way to keeping things in check.”
Nigeria’s regulator published regulations for digital assets last year, signaling an effort to find a middle ground between an outright ban on crypto assets and their unregulated use.
It has been reported Nigeria’s “tech-savvy” demographic are active users of cryptocurrencies.
“Young people who have grown up with the internet in their hands have an intuitive sense of risk that older generations don’t have,” Loretta said.
“They are less likely to transfer all their money to a scam. Instead, they’re way more likely to understand something and begin to use it in an entrepreneurial way. Technology is great like that.”
This month, Hong Kong rolled out a licensing regime and rules, following a years long ban on cryptocurrency use.
Hong Kong regulators now require crypto businesses to have anti-money laundering and counterterrorism financing processes, clear civil and criminal penalties if rules are broken, and onshore head office requirements.
“These are the basic building blocks of all financial regulation,” said Ms Joseph.
“Peer-to-peer technology is an exceptional innovation, and it’s giving developing countries new ways to get financial services into the hands of those without bank accounts but with mobile phones.”
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