It is fair to say that the majority of the countries around the world are still struggling with finding a way to regulate the cryptocurrency market. While representatives of some countries claim that crypto is too dangerous and risky and want strict regulations, others believe that taking a crypto-friendly stance is the best way to overcome the current challenges.
A few months back, the Senate Committee for Australia as a Technology and Financial Center finally released its crypto regulation recommendations. The committee has been working on this paper for a very long time, and the final piece of 168 pages gives very detailed and useful recommendations on how to regulate the crypto industry.
The main aim of the report is to find a perfect balance between ensuring the highest safety, while also supporting further innovation in the market. The much-awaited report comes with 12 recommendations which can be quite useful to follow. The report is of very high importance for numerous reasons.
First of all, it acts as an official document that shows the exact stance of Australia when it comes to crypto regulations, putting the country at the forefront of the crypto industry globally. It also gives other countries a detailed guideline on how to ensure crypto safety and support innovation at the same time.
As the chair of the committee, Senator Andrew Bragg put it, Australia can very easily become the leader in the digital assets market, further noting that the country can be a huge competition for countries like the UK, the US, and Singapore – all three of which have been working on finding a perfect balance in crypto regulations.
Key Recommendations From The Report
While the paper comes with a total of 12 recommendations, there are several that tend to be especially important. The report starts by discussing the general trends in the cryptocurrency industry and its regulations around the world, saying that for a long, countries have been trying to regulate cryptocurrencies just like any other traditional financial industry, which did not quite work.
The report claims that this type of approach does not keep in mind the fundamental differences that exist between digital assets and traditional finance. On the other hand, the report also notes the importance of the licensing system for crypto exchanges, which would give the industry an additional layer of legitimacy, which is very important for customer satisfaction.
The cryptocurrency market has become very popular among the population of the country. Many Australians trade with leading crypto exchanges around the world. In such a market, having a proper regulatory system is very important.
There are several factors that support the huge adoption of cryptocurrencies in Australia. One of them is how easy it has become to start trading digital assets. Traders do not even have to have much experience and understanding of the market, as the majority of the crypto exchanges offer auto trading cryptocurrency robots.
The second, and quite important recommendation that it noted in the report is the introduction of the decentralized autonomous organization entity. It would put Australia right at the forefront of the crypto industry, as there are not many places that have such a thing adopted.
The report notes that if approved, DAO has the power to put Australia at least a decade ahead of other countries when it comes to the decentralized financial markets and their future. Another very important part of the report is the importance of adopting tax rules for crypto-to-crypto transactions.
It was noted in the report that over 17 percent of Australians already own crypto assets. This is the third-highest number around the world and shows the huge popularity that the market has among Australians. But, the taxation of crypto-to-crypto transactions is very much confusing. According to the report, the tax should only be introduced when there has been a clearly definable capital gain or loss.
The fourth recommendation in the report is to encourage green crypto mining by introducing different types of tax cuts and incentives. It was noted in the report that offering a tax discount of 10 percent for renewable crypto mining could further increase the number of crypto miners using green energy. This is a move that could not only support the cryptocurrency market but also further develop the renewable energy sector, which has become huge in Australia recently.
What Are The Main Issues?
While the recommendations that the report put forward are very important, there are several issues associated with them. For starters, it is very much unclear how long it would take for Australia to turn these recommendations into actual laws.
According to Senator Andrew Bragg, all of these recommendations can be passed within 12 months, but they would need huge support from Australian lawmakers. At the same time, many are also worried about the period before the recommendations are turned into actual laws. According to some experts, the transition period could be quite hard for the market.
But, while there are some issues that should be kept in mind, it is clear that the report is full of important aspects and information that can be very useful for the cryptocurrency industry not only in Australia but around the world as well.
There are many details discussed throughout the report that can help countries globally find the perfect balance of regulating the cryptocurrency industry – ensuring the highest safety of traders, while also supporting the future development and innovation of the cryptocurrency market.