Blockchain Australia has extended its call for regulation around the nascent technology, telling a Senate committee that the nation was still somewhat well-placed in the space, but it has slipped behind global peers.
CEO of Blockchain Australia Steve Vallas told the Senate Select Committee on Australia as a Technology and Financial Centre on Friday that blockchain just can’t seem to shake its association as the “wild west”.
“We spoke at the testimony for the second issues paper, and I think when we had that conversation, you asked me whether Australia was doing well, and I think my response at the time was that we’re well placed,” Vallas said. “My position a few months later is that we’re still well placed, but we’ve fallen behind.”
He said other jurisdictions have moved quickly to establish “real success” in this space and that fundamentally the challenge for Australia has been a lack of guidance.
“We have not been provided adequate guidance with respect to regulatory frameworks as they currently exist,” he said. “I recognise why there might be some reasons why we’ve moved slowly, but I don’t think those reasons are adequate in the current environment.”
According to Vallas, that narrative has continued to be pervasive.
“That it’s, a bit of a wild west — we resist that narrative on the basis that I can happily say, the industry is seeking out clarity, we are very deliberately asking for the regulators to engage with us,” he continued.
Pointing to the ICO boom in 2017-18, Vallas said there was a decision by many governments to “wait and see”.
“I think is obviously the case that a lot of those projects were not very good, and ultimately, monies were raised quickly and monies were either lost or they were spent — but we didn’t establish much of a framework at that point in time as to what we should be doing,” he explained. “But the landscape as we see today is entirely different. We don’t see an appetite within Australia for ICOs, we don’t see the regulators comfortable allowing that to happen again, so we have a new chapter, but the narrative has persisted.
“It has been the case when people don’t understand the space, the tendency is to lean in on the wild west, to lean in on nefarious and bad actors.”
Vallas told the committee his organisation and its members don’t benefits from scams.
“It hurts us because it’s too easy to point to things that are not well known or considered — and to say it’s part of the industry, it’s just not,” he said.
“I don’t represent multibillion-dollar businesses who seek to perpetuate scams. In fact, they all suffer from it.”
According to Michael Bacina, a partner at Piper Alderman, regulators in Australia face the same problem their global counterparts do. He pointed to the United States where a digital currency exchange was recently shut down and said people are “effectively reading the tea leaves of what prosecutions have occurred to try and understand”.
“The industry wants to have clear guidance. I certainly don’t advocate that everything ought to be dealt with as a security or a financial product, because they’re not … and I suggest they be analysed starting out as looking at them as property as a commodity and if there’s something on top of that, that is not mutually exclusive for something becoming a financial product, that’s also a commodity. Land is a commodity, and it has all sorts of regulations around the transfer of land,” he added.
Also appearing before the committee was Chloe White, managing director at Genesis Block, who said the problem was not so much that regulators have not engaged, but rather that what separates Australia from international jurisdictions has been that Australia has tended to only pay attention to the industry during times when there is a lot of hype.
“And then during the quiet times, a lot of that capability and expertise is allowed to dissipate,” she said. “This is now the third time that we’re starting, again, to try to understand what actually this technology does, whereas in other jurisdictions, they’ve recruited for specialists into the public service, or they’ve set up multi-agency task forces that have continued to consult industry and develop policy through those quiet periods.”
She said that has put Australia at a disadvantage.
“There needs to be a greater commitment from policymakers to develop a real understanding of the space and its trajectory, because at the moment, what policymakers here are failing to do, is anticipate the issues as they arise and so we’ve been in a very reactive position where policy advice and analysis has been concerned,” White said.
Until such time regulation is introduced, the sector body wants safe harbour protections for crypto asset providers.
Cryptocurrency isn’t going anywhere, one Australian company submitted, and the local industry just wants to be covered by fit-for-purpose regulation.
The ASX has highlighted challenges in relation to custody arrangements on cryptocurrency exchanges, suggesting perhaps a more regulated environment would provide assurance to investors.