Hansard Extract – Select Committee on Australia as a Technology & Financial Centre

Steve Vallas, CEO of Blockchain Australia
Senate Select Committee Extract

We gave testimony on the Second Issues Paper [Senate Select Committee – Australia as a Financial Centre]. When we had that conversation you [Senator Andrew Bragg] asked me whether Australia was doing well and my response at the time was that we were well placed. My position a few months later is that we are still well placed but we’ve fallen behind. I think the material that has been presented in the submission reflects the fact that jurisdictions are moving quickly to establish some real success in this space and we haven’t moved quite as quickly.

Fundamentally, the challenge for us has been that we lack guidance. We have not been provided adequate guidance with respect to regulatory frameworks as they currently exist. Much of the material in the submission seeks to seek out that guidance directly from regulators. I recognise there might be reasons why we’ve moved slowly, but I don’t believe those reasons are adequate in the current environment, particularly in the context of all the material that reflects what is happening globally. 

There is also a narrative that continues to be pervasive, which is that it is a bit of a Wild West. We resist that narrative on the basis that we can happily say that the industry is seeking out clarity. We are very deliberately asking for the regulators to engage with us, publicly and privately, so we can have a real sense of where the regulatory perimeter currently lies and whether or not it is adequate for where we want to be going forward.

I’d also add, from our perspective, that the approach that has been taken is a very defensible, reasonable one. We want a graduated, fit-for-purpose regulatory framework to be developed. In order to do that we very quickly recommended things that can be started, implemented and considered concurrently. 

We have suggested that there should be a safe harbour provision enacted, with an appropriate period of time for transition. We’ve also said that we want a working group which includes regulators from across the country to come together and have an open conversation about this subject matter. 

Importantly, as part of that working group, we think we should run a token-mapping exercise. We should talk about these products, digital assets and tokens, and we should talk about what their properties are. It is something that has happened globally. We’ve found amongst our members here that it would be a bit foolish to make a decision to categorise things one way or another quickly without having had that conversation which has largely been absent from the jurisdiction.

I would also say that, with respect to the things that should and will take a bit longer, we think consideration should start to be given to the modelling of an AFSL-style regime so that advice can be provided to give consumer confidence and consumer protections elevated status. With respect to a market licence, most of this technology will pose challenges for what the existing frameworks can deal with and we think that technology needs to be given very specific consideration.

There are lots of other recommendations in the submission, but largely they build on the matters that I’ve already raised. They generally include bringing the ATO, AUSTRAC and ASIC closer to the conversation. We can talk about those in the questions and answers.

I would like to single out as well the issue of banking. It’s something that we’ve consulted with our members and, more broadly, businesses that associate with our members about. We would like the banking industry—and we know this is not the remit of the committee—to let us know what it is about digital assets and cryptocurrency that potentially make operational challenges for business so pronounced that businesses are being debanked or not being offered services. That is something we would like to put on the record.

To close out these points, from our perspective, there is an opportunity. It is presenting. It is one that needs to be taken consciously and deliberately. We don’t believe—again, this is in the context of the material that we’ve put together that shows what is happening globally—that we can accidentally be successful in this domain. 

We as a country need to choose through government and through the implementation of a regulatory framework a path that says, ‘We are interested in this subject matter and we are committed to getting great outcomes for Australians and Australian business.’

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