Australia's crypto industry is reeling from controversial comments made by the Australian Securities and Investments Commission's (ASIC) digital assets chief during a communications meeting where he delivered initial comments on a controversial consultation paper.
Responding to questions about the application of the Non-Cash Payment Facility (NCP) Act to digital assets at a meeting on Wednesday, Rhys Bollen compared bitcoin to cigarettes used as currency in prisons.
NCP refers to a payment method that does not involve physical money, including digital wallets, credit cards, and cryptocurrencies.
The example in question focuses on the use of a stablecoin for payments, which ASIC interprets as triggering an NCP event. However, the directive's broad language has raised concerns that digital assets that enable payments—whether Bitcoin or stablecoins—could fall under the NCP classification.
When pressed to elaborate, Bolen acknowledged the complexity of the problem, drawing evocative analogies.
“Theoretically, almost anything can be used to make payments to someone else. You know, cigarettes are used as payment in prisons,” Bolen said Wednesday. We're getting close to the range. I don't have a bright line test for you.
Industry leaders have expressed concern that applying financial regulation to non-secured wallets or software could stifle innovation and drive businesses offshore.
Michael Juric, general manager of programs and partnerships at Australian stablecoin project AUDD, criticized the potential implications for widely used crypto tools such as MetaMask.
“I think this attitude sets a very dangerous precedent. For example, MetaMask is a non-custodial wallet offering. It's just software that allows the user to sign transactions,” she said. Decrypt.
“If one of MetaMask's primary functions is to allow users to send and receive payments, this means that ASIC may require MetaMask to obtain an AFSL to provide its services to Australian users.
“Trying to apply financial regulation and licensing obligations to software will push the already growing migration of products and services out of Australia,” Jurick added.
Earlier this month, ASIC released Information-225 A consultation paper proposes updated guidance on compliance with the Corporations Act.
The document includes 13 examples of how digital assets such as stablecoins, staking services and tokenized securities can be classified as financial products.
The issue of crypto
Australia is tightening its grip on crypto regulation, with ASIC and the government implementing various measures to regulate the growing sector.
ASIC has encouraged crypto companies to apply for an Australian Financial Services License (AFSL), granting them a reprieve from legal action during the application process. But if companies choose not to apply, they must justify their decision.
In October 2023, the Australian Treasury Released A consultation paper proposing the regulation of digital asset intermediaries within the current financial services licensing framework.
This proposal aims to address consumer disadvantages while supporting innovation in the crypto ecosystem.
ASIC has it too. It has improved. Regulatory Guide 133 (RG 133) New requirements for crypto protection for the first time since June 2022.
Key changes include improved security protocols such as cold storage and geographically distributed key backups, strict risk management procedures and multi-signature transaction controls.
Public comment on INFO-225 will remain open until February 2025, with finalized guidance expected later that year.
Edited by Sebastian Sinclair.
Daily Debrief Newspaper
Start every day with top news stories, plus original features, podcasts, videos and more.
