The Senate Select Committee on Australia as a Technology and Financial Hub has delivered its report on how regulators should approach cryptocurrencies and blockchain, but local fintech companies are cautiously optimistic about what this means in the future.

Speaking to InvestorDaily sister nestegg, Labrys chief executive Lachlan Feeney described the overall reception of the report as optimistic, but warned the government not to bite off more than it can chew, instead urging it to focus on implementing the recommended policies.

“There was a lot of concern in the industry ahead of the report and although the recommendations are mixed, the overwhelming feeling is one of relief,” he said.

Pointing to recent moves by regulators in China and the US, Mr Feeney acknowledged there were fears something similar would happen in Australia.

“Fortunately, the recommendations are a step in the right direction and, if adopted, could help legitimize the industry locally, give it legal status and provide a framework for long-term innovation,” he said, praising the report’s recommendation. , that the rules on digital asset transactions and capital gains tax be simplified as a sensible improvement.

“Current regulations are completely incompatible with the nature of digital currencies and impossible to comply with,” he said.

That being said, Mr Feeney expressed some reservations about the possible different interpretations of the definition.

“A further recommendation was made that the only taxable event is the reverse conversion to fiat – currency issued by the government. It is important to ensure that policy follows this, otherwise the change will be marginal,” he said.

Another reform proposed by the report and welcomed by the community was the need to create a decentralized autonomous company organizational structure.

“This is an extremely progressive move that would ensure blockchain start-ups have clarity and certainty about operating in Australia,” he said, describing it as a favorable regulatory move that would attract both talent and new blockchain businesses to Australia. .

Australia’s burgeoning blockchain industry also welcomed the report’s recommendation to implement a clearer process for fintech companies that have been debanked as a result of their involvement in the crypto sector.

“The lack of such a process has been a critical problem for so long as so many fintech businesses have been pushed out by banks operating with an archaic and anti-competitive mindset,” he said.

But the government’s attempt to raise barriers to entry into the industry has raised a number of concerns for local fintech companies.

The report’s recommendation that AUSTRAC (Australian Transaction Reporting and Analysis Centre) entry requirements for digital currency exchanges should be increased was cited by Mr Feeney as “extremely concerning”.

“It would be a shame to see the doors closed on these businesses that have been lucky enough to be established already and prevent future blockchain startups from getting off the ground in the first place,” he said, claiming that many of the digital currency exchanges would not exist in Australia if these recommendations had been implemented five years earlier.

“Essentially raising the barriers to entry stifles competition at a time when we should be doing the exact opposite,” he said, arguing that the domestic blockchain sector is at a crucial period of development.

“Blanket legislation like this could kill the startup ecosystem,” he warned.

Concerns have also been raised about the conservative approach the government is taking with central bank digital currencies (CBDCs).

“China is expected to launch its CBDC next year. Australia is too slow and needs to rethink its approach to not fall further behind in this,” he said.

With the next federal election looming, Mr Feeney does not expect this report to be the last word on the matter.

“We suspect this report is the first of many as Australia looks to establish itself as a global force in the industry,” he said.

It should also be noted that many of the recommendations made by the Senate report may soon be redundant as the industry continues to change.

“This report only provides recommendations. It remains to be seen whether they are adopted, changed or completely ignored. It’s a step in the right direction, but it’s only the tip of the iceberg,” Mr Feeney said.