Announced Monday, the Federal Government has detailed Australia will become the first country in the world to 'token map' the use of crypto assets which will help identify how crypto assets and related services should be regulated.
The announcement comes following an ASIC release earlier this month on investor behaviours, highlighting 44% of Aussie investors have held cryptocurrency since 2020 - second only to Australian shares.
Further, ASIC research revealed 58% of those between 18–34 were significantly more likely to report owning at least one form of cryptocurrency when compared to 46% of those aged 35-54 and 20% of those aged over 55.
Treasurer Jim Chalmers said Australians are experiencing a digital revolution across all sectors of the economy, but regulation is struggling to keep pace and adapt with the crypto asset sector.
"As it stands, the crypto sector is largely unregulated, and we need to do some work to get the balance right so we can embrace new and innovative technologies while safeguarding consumers," Mr Chalmers said.
"With the increasingly widespread proliferation of crypto assets - to the extent that crypto advertisements can be seen plastered all over big sporting events - we need to make sure customers engaging with crypto are adequately informed and protected."
What is 'token mapping'?
Speaking to Savings.com.au, Block Earner CEO Charlie Karaboga said token mapping is a term that is used to categorise crypto tokens.
"There are various token categories such as security tokens, utility tokens, currency/payment tokens and NFT tokens," Mr Karaboga said.
"Security tokens are essentially the digital form of traditional investments like stocks and bonds. Under ASIC regulations, any company dealing with security tokens needs to hold an Australian Financial Services Licence, whereas the other three categories do not require this."
Mr Karaboga said regulation through token mapping will enable the government to advise how individual tokens should be treated based on current regulations, or create regulations around them.
“Regulation is always a positive step for any new and emerging industry, but in a constantly evolving space like crypto, industry leaders and the government must work in close alliance to ensure the correct precautions are taken at the optimum time," he said.
Crypto 'black-market' could emerge
Mr Karabago said as the government maps a limited list of top tokens, exchanges will be blocked from listing the countless others that fall by the wayside.
"Preventing tokens from taking space on Aussie exchanges is similar to blocking websites with Aussie IP addresses," he said.
"Users and customers will inevitably find ways to access these tokens, which will create an underground market."
"There are thousands of projects out there that release tokens before their project roadmap is crystal clear. This only complicates the token-mapping process, which might hold us back from investing in the next Ethereum."
In theory, Mr Karaboga said token mapping is a positive move but taking small steps will be the key to success.
"This means identifying the most harmful tokens first, rather than implementing a blanket framework on day one," he said.
"From there, the government and the Australian crypto community can come to a mutually beneficial agreement that supports both consumer safety and innovation in equal measures.”
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