Senate committee urges digital assets bill "not be passed"

A senate committee has suggested the federal government continue its consultations with the market to develop more effective digital asset regulations, delaying passage of a bill it was considering.

Tabling its report on Tuesday [pdf], the economics legislation committee made two recommendations for slight changes to the Digital Assets (Market Regulation) Bill 2023.

The private bill was presented in April to introduce digital assets regulation targeted at consumer protection and to promote investment in digital currencies.

The committee found “the bill is at odds” with the approach the government is undertaking, and “lacks” details and certainty, while also failing to work with current regulation, “creating a genuine concern for regulatory arbitrage and adverse outcomes to the industry.”

“The committee does not consider the bill to be the appropriate vehicle to implement digital asset regulation in Australia," it wrote.

While the “digital asset industry and workforce will continue to make a significant contribution to the Australian economy ... there are significant consumer and market integrity risks in the industry that should be mitigated.

“In the committee’s view, well-designed digital assets regulation can strike the right balance between improved consumer protections and support for industry development.

“Importantly, new regulation should clarify the application of existing laws and address where regulatory shortfalls may exist.”

The committee report noted inquiry participants “held concerns with the bill’s proposed definitions, and licensing requirements left significant details to delegated legislation which has not been presented with the bill for consideration”.

It also pointed out the government recently undertook a token mapping exercise with further consultation anticipated soon on similar digital asset topics.

The findings were not unanimous, however.

In its dissenting report, Liberal senators Andrew Bragg and Dean Smith labelled the committee's approach as “hurting Australian consumers and investment”.

“The Digital Assets (Market Regulation) Bill is the first serious step towards implementing a comprehensive digital asset regulatory framework." they wrote.

“The government has junked the ambitious crypto agenda of the former Liberal Government, and Australians will pay the price."

They argued that scrapping the bill would hurt investors in cryptocurrency, as well as the realisation of "value is in the broader application of cryptography and blockchain to disrupt existing industries.”