Australia's plans to regulate the crypto industry may face a longer timeline than initially expected with potential delays extending beyond 2024, according to internal documents obtained by The Australian Financial Review.
The documents reveal the government plans to release consultation papers in the June quarter and further conduct stakeholder roundtables on crypto licensing and custody in the September quarter.
Consequently, this could further prolong the development of the regulations as final submissions to the cabinet are not expected until later in the year.
The government has created a dedicated 'crypto policy unit' within the Treasury Department, which is exploring requirements for crypto licences, including 'fit and proper person' tests and increased consumer protections.
Stakeholders may be disappointed by the perceived delay in implementing a licensing regime, as some consumer groups are seeking immediate protections and businesses are seeking regulatory legitimacy.
Reduced demand after FTX collapse
The Treasury Department believes that the demand for cryptocurrencies has weakened significantly since the collapse of FTX, which could give the government more time to develop regulations.
The government is also conducting a token mapping exercise to provide clarity on how any new licensing framework would operate in practice.
Documents obtained by AFR suggest that the government aims to create a regulatory environment that balances the benefits of crypto innovation with the risks of illicit activities, such as scams and money laundering.
Token mapping exercise
Australia will become the first country to pioneer the ‘Token Mapping’ exercise in an attempt to define the various types of digital assets and bring them under a regulatory framework.
This exercise will outline new rules on digital assets to safeguard and educate consumers about extreme market volatility and the possible pitfalls of crypto investments.
The taxation office estimates that more than one million taxpayers have interacted with the crypto asset ecosystem since 2018.