Robust rules drafted amid ‘crypto winter’

Australians riding the cryptocurrency rollercoaster can be reassured that reforms prepared for the previous government are not dead in the water.

The meltdown has been described as a “crypto winter” by some in the industry after years of apparent wealth creation.

The crypto market value has crashed from $US2 trillion ($A2.9 trillion) in April to less than $US885 billion.

Watch the latest News on Channel 7 or stream for free on 7plus >>

Bitcoin has tested the key $US20,000 level, slumping more than 70 per cent from November’s peak, and the second-biggest cryptocurrency, Ethereum, has also been smashed.

Crypto volatility and the increasing number of scams associated with crypto assets are top of the agenda for Australia’s financial regulators, according to their quarterly statement released on Thursday.

“Participants agreed on the importance of a robust regulatory framework to protect investors and guard against potential financial stability risks,” the Council of Financial Regulators said.

A landmark Digital Services Act for crypto market licensing, custody of assets, taxes and other key reforms was proposed earlier this year by Liberal senator Andrew Bragg, but wasn’t introduced to parliament.

The federal Treasury’s crypto policy unit has developed a proposed licensing and custody regimen, and industry consultation has since been completed despite the change of government.

The regulators say they also discussed rising interest in stablecoins and the need for new laws.

Banks are keen to use the form of digital coin, which can be linked to a real asset such as the Australian dollar, as a new way to store value and settle transactions.

De-banking, where banks refuse to run accounts for businesses seen as more risky, was the other main issue discussed at Monday’s meeting, the council said.

Research by Australia’s financial intelligence agency, a council member, shows the range of businesses impacted by losing or having limited access to banking services has expanded over the past decade.

Financial technology start-ups, money transfer firms, digital currency exchanges and not-for-profit organisations have been facing bank account closures.

Regulators said advice on how banks’ risk aversion might be addressed, along with ways to make them explain their decisions to close accounts, will be provided to the federal government in August.