Good argument for regulating crypto as a financial product, says minister

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Financial Services Minister Stephen Jones has said there are good arguments for treating some cryptocurrencies as financial products under the law as the government aims to introduce legislation to regulate the sector later this year. .

Crypto regulation will be a key issue in the fintech sector in 2023, and Jones says that as a first step, the government would soon launch a token mapping exercise that would show which crypto assets it planned to regulate.

Assistant Treasurer Stephen Jones Credit: Steven Siewert

This follows a tumultuous year in crypto markets, with confidence shaken after valuations plummeted and Bahamas-based crypto exchange FTX, once valued at US$32 billion, went bankrupt in November.

Jones said the collapse of FTX puts the need for crypto regulation beyond doubt, and governments are focusing on crypto assets that act as financial products but are unregulated.

I do not want to prejudge the results of the consultation process that we are about to undertake. But I go on the principle that if he looks like a duck, walks like a duck and sounds like a duck, he should be treated like one, Jones said in an interview with this masthead.

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I am not attracted to the establishment of a completely separate regulatory regime for something that is, for all intents and purposes, a financial product. Currently, many crypto products are not considered financial products, which means that much of the industry is unregulated.

One up for debate is whether the government should craft legislation that classifies all crypto assets as financial products, a position supported by the Australian Securities and Investments Commission (ASIC) and Commonwealth Bank.

Crypto industry lobby group Blockchain Australia, on the other hand, told the Federal Treasury last year that it was strongly opposed to this approach. He argued that if all crypto assets were treated as financial products, it would hurt investment in the sector and result in the loss of crypto-related jobs.

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