Since its inception, cryptocurrency has largely been left to its own devices. Investors have made money, and communities have been built through a shared passion for the innovative sector.
So when I was assigned the role of chair of the Senate Select Committee on Australia as a Technology and Financial Centre, I assumed there would be resistance.
But to my surprise – I’ve never seen an industry so keen for regulation.
Almost everyone I’ve spoken to in this industry understood that regulation would bring credibility and validity to this sector that had been cast aside by many as fanciful and illegitimate for its 12 year lifespan.
It can be difficult getting items on the Canberra agenda. Particularly when the prevailing view was that Crypto was an esoteric and fringe pursuit, which simply does not reflect reality.
Some industries and issues have waited for decades for Canberra to deliver reform.
It might not come as a surprise to you here today, but Canberra can sometimes have trouble catching up to the tech sector, where development is exponential, and that knowledge gap is even larger.
In this case, I think the crypto report will be addressed quickly and we’ll see reform within 12 months.
The industry has done well to present its case. Finder has played a vital role in this process through raw, simple, digestible data: statistics that were easily understood.
The submission was a standout. The data they provided, that 17% of Australians own cryptocurrency and that 13% said that they planned to in the next 12 months — was some of the most important information we received. I have cited those figures on countless occasions since, in speeches, in opinion pieces, and in the final report.
Finder’s submission conveyed a clear message: cryptoassets are here to stay. It was backed in by similar research from Swyftx/YouGov which said that one in five Australians have owned crypto and the majority are millennials and Gen Zs.
They said: “The typical Australian crypto owner is now a millennial parent with a child under 18 living at home.”
The data doesn’t lie. You have the weight of numbers on your side, you should continue to collect data on the crypto revolution. And you should get in touch with your local MP to tell them to implement our important structural reform plan, delivered by the Senate.
There was, and is, a sense of urgency because at times, those who want to be part of the digital asset world, are being unfairly disadvantaged by debanking.
The committee heard about individuals having their personal bank accounts cancelled with minimal notice or even reasons. One was cancelled more than 90 times.
Banks have been able to hide behind the fact that those activities are outside the banks’ risk appetite… but in certain instances, it looked far more like anti-competitive behaviour.
The debanking recommendations must be addressed urgently. We set out a series of recommendations designed to take the banks’ excuses for debanking away. Law reform is essential.
But much can also be achieved through sensible decisions by financial institutions. Initial progress is encouraging. There was a statement from AUSTRAC last Friday in response to the Senate. AUSTRAC warned banks that debanking was not a good approach:
“The effect of de-banking of legitimate and lawful financial services businesses can increase the risks of money laundering and terrorism financing and negatively impacts Australia’s economy. For this reason, AUSTRAC continues to discourage the indiscriminate and widespread closure of accounts across entire financial services sectors.”
Australian banking has a recent history of acting in an anti competitive manner. In the earlier part of the Senate Inquiry, we saw major banks seeking to undermine Buy Now Pay Later innovation.
We know that Australian consumers, particularly millennials, are savvy and agile.
The adoption of Buy Now Pay Later in lieu of traditional credit services shows that for many consumers, if a service doesn’t work the way it should, they will do their research and find better alternatives.
Our committee recognised the disadvantage to individuals using crypto who were being debanked – and is attempting to ensure that doesn’t keep happening.
Because if it does – we lose out. If you can’t secure a bank account, it is very hard to succeed in establishing a disruptive innovative business.
The opportunity posed by peer-to-peer finance is limitless. A financial system that does not rely on centralised financial institutions is a truly extraordinary prospect.
According to some estimates, there are about $100 billion worth of assets being held in DeFi applications right now. The sector barely existed four years ago. According to the founder of coinbase, Fred Ehrsam, we are at ‘one tenth of 1% into the development of DeFi’.
It challenges the imagination when we consider a financial system can exist without financial institutions acting as gatekeepers. A world in which individual investors have greater control over the assets that they hold.
Action before the election
The report was handed down a fortnight ago. I delivered the first copy to the Treasurer and the second to Senator Hume. Now the report sits with the executive government.
Given where we sit in the electoral cycle, it will not be possible to legislate the reforms before the election.
I am working to secure my party’s support to adopt this agenda for our platform for the next Parliament. If we secure the trust of the Australian people, we can implement the plan within 12 months.
We need to move quickly for obvious competitive advantage reasons. But there is also a time imperative because the Committee decided not to recommend a “safe harbour” in the absence of a legal framework.
I felt we couldn’t give this sort of blank cheque. But if it does become government policy, there will be scope to work with the regulators to issue statements about matters which may require relief as we embark upon reform.
- This is an edited version of Senator Andrew Bragg’s address to Finder on the Senate Select Committee’s report into digital assets