“We want to encourage innovation in crypto assets – innovation creates jobs and growth,” Digital Economy Minister Jane Hume said at the Blockchain Australia event.

“There are so many innovative use cases for crypto assets, many of which are not at all far from becoming mainstream. These include international payments, lending and borrowing, NFTs and asset tokenization,” Ms Hume said.

She confirmed the government would take “minimalist” action, ensuring “fit for purpose, technology neutral” regulation, before announcing the publication of a policy paper detailing the government’s proposal.

“The government is taking a stand on crypto assets. This is a forward thinking position. We're pushing,” Ms Hume said.

“Australia is serious about the right regulation for the digital age. And emerging technologies like crypto are key.

“We're not just bringing cryptocurrencies into a pre-digital regulatory world. That would be too easy for us in government. But that's not the way to promote a thriving industry here in Australia."

According to the minister, regulation should seek to "review" the technology and apply regulation consistently.

"The notarial deed in electronic form does not differ from the paper version. It's still a title deed. The regulation should not distinguish between the two. Likewise, if the deed is put on the blockchain and becomes an NFT, it is still a title deed,” Ms Hume said.

"We must regulate the underlying thing, not the means by which it is presented, stored, or transmitted."

The government also intends to establish a market licensing regime for crypto exchanges, while introducing custodial arrangements that will ensure that crypto investors who hold their crypto on an exchange can always access their money.

Ms Hume estimated that the digital asset economy, currently worth $2.1 billion, could grow to $68.4 billion by 2030. with the correct regulatory settings.

She also delved into Web3's ability to provide alternatives and counterbalances to the power of big tech, freeing users from the likes of Google, Facebook and Apple.

“Crypto assets are a powerful way to develop user-owned networks. They provide a level playing field and do not change the rules.

"Platforms and applications built on Web3 will not be owned by a central gatekeeper, but rather by users who will earn their share of ownership by helping to develop and maintain these services."

Digital Services Act to enable crypto revolution

In a separate address to the blockchain audience, Senator Andrew Bragg proposed the creation of new legislation to help Australia fully appreciate the promise and potential of blockchain technology.

According to Mr Bragg, the Digital Services Act would make Australia one of the only jurisdictions facing this problem.

The senator also noted changes in Companies Actnoting that Decentralized Autonomous Organizations (DAOs) may be the most significant development since the first public limited companies were floated on the Amsterdam Stock Exchange in 1602.

In addition, Mr Bragg said the digital asset reform agenda provided an opportunity to reassess the country's tax and regulatory settings.

“The process of building a tax system for digital assets can be the impetus for comprehensive tax reform. We are applying the tax system to a new and emerging area by conducting a comprehensive review of the existing system,” said Mr Bragg.

“The conceptual framework that this process will create is a once-in-a-generation opportunity to clean up our regulatory setup.

"We are currently talking and thinking about applying the tax laws that apply in the analog economy to the digital world. It is not impossible to imagine that in a decade we will be talking about the opposite.

He confirmed that the Tax Board will review the tax provisions for digital assets at the request of the Treasurer.

"This review will need to scrutinize the finer details, clarifying the tax status of, among other issues, initial coin offerings, play-to-earn games, airdrops, staking, and the currency status of stablecoins and CBDCs."

Alongside the Board of Taxation review, the Ministry of Finance will organize token mapping.

“Clarifying the assets will be a delicate task. We don't want to separate tokens into limited and inflexible categories. As well as the rest of the reform process."

Senator Bragg's proposed Digital Services Act would be guided by four principles: technological neutrality; broad, flexible principles, not a prescribed code; regulation by a minister rather than by bureaucratic agencies; and, within government, cooperation and appropriate powers, resources and personnel.

"It will show that Australia is open for business and things are clear and clean."

Maja Garatsa Djurdjevic

Maya's career in journalism spans more than a decade in finance, business and politics. Already an experienced editor and reporter in all elements of the financial services sector, before joining Momentum Media, Maya reported for several established news outlets in South East Europe, looking at key processes in post-conflict societies.