Slade Brockman (WA, Liberal Party) Share this | Hansard source

Bitcoin began its life in 2008, well over a decade ago. I'm sure the first time many of us heard about bitcoin we were a bit puzzled, a bit confused. I, like many, decided to take a deeper dive into it. I didn't buy any—I'll put that on the record! Sometimes I wish I had; sometimes I'm glad I didn't. The fact is, though, that it came into existence in 2008. For most of us, it came onto the radar around that time as well because it created a massive media splash, and a lot of people who are interested in the financial world did take a strong look at it. Whether or not they got involved in that particular crypto, they did say: 'This is very interesting. This is something where the genie has come out of the bottle and is never going to be put back in.'

Here we are, in 2023, looking at Senator Bragg's private senator's bill related to digital assets, the Digital Assets (Market Regulation) Bill 2023. I must say, it's clearly not before time. It's necessary that this parliament and Australia come to grips with this for a variety of reasons that I will go into later. I do, like my colleagues, wish to thank Senator Bragg for bringing this matter forward. This is something that's very important for this parliament to grapple with. It's important for the Australian people that we consider both the implications of digital assets and digital currencies and how Australia should move forward in a regulatory sense in dealing with asset classes such as these. I think it's fair to say—and I do not pretend to be an expert in this particular asset class—that there's both misunderstanding and a lack of understanding of cryptocurrencies and other digital asset classes. There are over 8,000 digital assets available for purchase, and only a small number of those are, in fact, currencies. Even then, to define them as a currency also begins to challenge some of our preconceptions and some of our understanding of what currencies and money actually are and what they will be into the future. That's also something that we as a society and as a parliament are going to have to grapple with.

In my own considerations of these kinds of issues, 2½ weeks ago I was in the small country town of Carnamah in Western Australia where we were talking about bank branch closures and the importance of physical cash—actual money—to local communities, particularly in regional Australia. And now today we are discussing the other end of the spectrum—the digital assets and cryptocurrency, which are increasingly becoming an important asset class and something which parliaments have to grapple with.

Many of us in this room may not understand the operation of smart contracts that run decentralised finance or the algorithms that manage the blockchains. However, we need to know that it is likely to be the way payments, finance, banking and asset transactions are carried out in the future. It is estimated that 25 per cent of all Australians already hold a cryptocurrency or a crypto asset, so it is something already impacting the lives of Australians. As my colleagues have said, this is not the time to kick the can down the road, hoping that someone else might understand it better at some time in the future. There's an opportunity for Australia to grasp in both hands, and we should grasp that opportunity as soon as possible and build Australia's digital future.

Senator Bragg talked about some of the opportunities, but he also talked about some of the risks—particularly the risks of other digital currencies coming to dominate the market which are not necessarily in hands favourable to Australia or that seek to utilise the information that underlines digital currencies in a way that is favourable to Australia's interests. Senator Bragg talked about the Pacific islands and the possibility of a digital currency operating in that kind of area and then growing to scale. It is something that we do need to deal with as soon as possible.

This bill seeks to establish regulations around the fundamentals of what will enable crypto assets and cryptocurrencies to function in a modern, international, digital economy. To enable this, regulations need to be built around the establishment of an Australian dollar stable coin to allow seamless digital Fiat transactions, digital exchanges to enable the transactions of digital assets, and regulations encompassing custodian service to hold these digital bearer assets. With an Australian dollar stable coin, digital assets, exchanges, custodians and regulations to protect investors and consumers, Australia will finally have the foundation from which it can build a competitive digital future.

Other countries are already in this race. There are over 130 countries representing 98 per cent of global GDP exploring central bank digital currencies right now. Australia was one of those, but that has been terminated under this Labor government. Central bank digital currencies do cause some concerns in some areas, and I share some of those concerns, but the fact is we are seeing a global push in this area, and if Australia is not at the forefront of looking at how those central bank digital currencies will operate and how they will come into the Australian market then we risk allowing things to occur with our financial system that we do not wish to happen. We don't want Australians to look overseas for digital assets that they require to operate their businesses in a financially effective way, because that could offer other risks to our economy and to the international geopolitical environment.

Nearly every G20 country has made progress and invested resources in central-bank digital currency projects. There has been US$100 billion invested by venture capitalists worldwide since 2017, not just developing cryptocurrencies but reimagining commerce on the global scale. The biggest investors are obviously in places like New York, London, Zurich, Hong Kong, Singapore, Seoul and San Francisco. Why? Because they're all major financial centres. Global banking centres can see that the future of commerce is going to be based significantly on blockchain driven solutions, and we need to be a part of it. We see it through institutional giants like BlackRock, Fidelity, Deutsche Bank, Citadel and Franklin Templeton, just to name a few who have been investing in this kind of infrastructure. Again, this is something that Australia needs to be a part of. When you can transact $1 or $1 million globally in less than 30 seconds with no exchange-rate charges, no rent fees, no three-day delays, it's no wonder that Australians, particularly those dealing with significant amounts of money, want to be a part of this. We cannot pretend this isn't happening. We cannot pretend that these systems are not in place, as much as they do concern some people.

Although countries with major financial centres are the largest developers, smart contract-driven decentralised finance and crypto assets are being adopted massively all around the world, particularly in the developing world. Vietnam, Indonesia, Philippines, Thailand and Pakistan are adopting this technology, often at a citizen based level, because they see in these kinds of assets a level of trust, certainty and the ability to defray risk that they don't have in their own countries' financial systems. So we're seeing that these systems, these developments of cryptocurrencies and crypto assets, are providing a level of certainty and trust that allows people to step outside the systems of countries that perhaps do not have the regulatory frameworks, certainty and trust that the Australian financial system has. This is also an opportunity for Australia to be a part of this movement, to offer the trust and certainty that we have in the Australian financial system to the world.

This is probably the first new significant asset class since the Dutch East India Company developed an equities exchange in 1601. It is probably the first brand-new class of assets since then. What stands in front of us now is this new asset class known as crypto assets. Unlike the equity exchanges of the 1600s, today's cryptocurrencies and crypto assets are driven by smart contracts and will be limited only by the boundaries of our creativity. We as Australians should seek to lead that creativity. This is not to say that we need to abandon everything that has brought us to the trustworthy economic structures that we have today—in fact, far from it. As I said when I started my contribution, 2½ weeks ago I was in a small country town in Western Australia, where the importance of physical cash was highlighted.

But as I stand here in this place now, we have to recognise this trend. We have to be able to walk and chew gum. We have to be able to embrace this new technology while protecting the trust and certainty in our economic system that is the basis at its heart of Australia's prosperity. So whilst we on this side recognise this is a private senator's bill, it is sadly and likely to be enacted into law. It is an important part of the conversation and hopefully it will be a spur to those opposite to actually advance this discussion more quickly, to actually put in place the building blocks—and they won't be the final building blocks; we understand that—of how Australia is going to be a part of this new set of assets, this new crypto asset, crypto currency world. It is coming; we can't stop it. We should be a part of it. In fact, we should be world leaders in this. We have a trusted economic structure. We have a trusted regulatory environment, and we can play a significant role in this for ourselves, importantly for our region and for our allies across the world—like minded countries with whom we are closest to. In doing so, we will ensure Australia's economic development into the future.

Debate interrupted.