Managing Director of Blockchain APAC, and tech advisor for Skafold Global, Steve Vallas, said token mapping had the potential to give the regulatory perimeter shape by helping to legally define digital assets and whether they are financial products.
“As an example, the token mapping exercise could provide guidance to exchanges and industry stakeholders about what factors and features either create or exclude the obligations applicable to financial products,” Vallas said.
“In effect facilitating a further opportunity to determine whether the legal classification is appropriate given the type of product, it’s risk and how it is likely to develop or be reconstituted.”
Global Leader, Digital Transformation Practice, Norton Rose Fulbright, Nick Abrahams, agrees with the government’s current priorities, arguing there are too many unregulated exchanges in Australia.
“Many of them are sub scale. These exchanges pose a significant risk to Australians, especially those who store their crypto on the exchange. If the exchange is compromised either by fraud, hacking or a liquidity shortfall, many everyday Australians will lose their money.”
Abrahams said token mapping would help distinguish crypto investments from the more innocuous use of digital tokens, such as for marketing and loyalty programs by big brands.
“We need to move quickly to a situation where it is clear which tokens are unregulated and which are regulated. Not all tokens need to be regulated.”
Global authority in digital asset regulation and consultant with McDonell Nadeau, Loretta Joseph, said that in addition to “proper rules around custody”, the turmoil created by FTX’s collapse highlighted the urgent need for basic compliance clarity for the crypto industry.
“The last few days has shown that things like reporting, governance, treasury management–whether it’s a crypto asset or whether it’s a security or fixed income assets—these things need to have the appropriate checks and balances put in place by these companies.”
Joseph recently participated in a discussion of global standards for virtual assets held at the 17th G20 in Bali: she said progress was being made on global alignment and that Australia didn’t need to reinvent the wheel.
“We are dealing with an industry that is global in nature. I think all jurisdictions should take note of the global standard-setters and work from those frameworks,” Joseph said.
She said consensus on definitions across regulators at a global level was also important to avoid what she describes as “jurisdictional arbitrage”.
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Read More: Crypto Regulation in Australia – Forbes Advisor Australia