Senator warns lack of regulations could harm Australian crypto innovation

Conservative Australian senator, Andrew Bragg, has asserted that Australia must introduce better regulations for crypto assets if the country is to “stay ahead of the game” and foster innovation.

Appearing on Sky News, the member of the ruling Liberal Party — who is chairing a senate inquiry into Bitcoin and other digital assets — stressed that crypto asset products have already proliferated, emphasizing the need for Australia to cultivate a positive business climate and offer consumer protections for the burgeoning industry.

“The reality is these products are out there now, people are using them,” he said. “We need to make sure that we have the right policy and regulatory environment to be able to maintain our competitive advantage, but also to protect consumers.”

“People are using [digital assets] and we need to have a thorough review of it and see what sort of policy Australia wants to have if we want to be a tech and financial center.”

The senate inquiry into digital assets that Bragg is chairing was announced earlier this week. A paper compiled on May 19 indicates the committee will examine cryptocurrency policy in Australia with consideration of the regulatory approaches of the United States, Canada, the United Kingdom, and the EU.

The case for a regulatory framework. https://t.co/s6BpVgLviY

— Steve Vallas (@stevevallas) May 21, 2021

The paper warns that a failure to deliver comprehensive crypto regulations may drive investment offshore and undermine Australia’s competitive standing within the industry:

“The committee will be assessing options for the development of a comprehensive regulatory framework for cryptocurrency and digital assets. We want to know what type of policy provision and legal certainty is needed to drive private investment into Australian digital assets rather than the investment occurring offshore.”

The inquiry will look into the alleged practice of “de-banking” — where traditional banks suspend services to fintech firms who compete with legacy financial institutions. Bragg attributed the reported prevalence of de-banking to a “lack of sophistication in Australia relative to comparable markets.”

Bragg noted it is in the interests of the traditional financial system to repress the growth of the cryptocurrency and digital asset industries, stating:

“There is a strong vested interest in the banking and finance sector to keep the status quo in place where the banks and the public sector sort of, you know, run currency. And we need to interrogate that to make sure that that is the right thing for Australia, because when innovation happens, the solution is not to close the door on it.”

In response to questions regarding if Bitcoin’s price is vulnerable to manipulation, Bragg noted the committee’s intention to be “thoughtful and cautious,” but emphasized the prevalence of “unsavory” practices in the traditional markets.

“Everything is open to market manipulation,” he said. “There has been a lot of activity the banks have undertaken over the time as the custodians of the financial sector [...] which has been unsavory.”