Dean Smith (WA, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Hansard source

I rise this morning in support of the Digital Assets (Market Regulation) Bill 2023, which addresses a key aspect of our ever-evolving financial landscape. My colleague Senator Bragg's private senator's bill is a testament to the coalition's commitment to protecting consumers and instilling confidence in investors. It acts where the Albanese Labor government has hesitated and failed. At its core, this bill regulates the gatekeepers of the digital asset industry. It introduces a comprehensive licensing structure accompanied by authorisations that will in turn impose a set of obligations on licensees. These obligations, to be developed in consultation with industry stakeholders and the broader community, are essential components of the robust regulatory framework Australia needs. Included in these obligations are minimal capital requirements designed to create a financial buffer in scenarios of economic downturn. This proposed legislation also emphasises the segregation of customer funds, ensuring that these funds remain distinct from corporate funds even in the unfortunate event of a digital currency exchange or custody service declaring bankruptcy.

Most notably, Senator Bragg's bill introduces governance standards that elevate the digital asset industry to the level expected of other financial services and products. Disclosure requirements, both to participants and government agencies, serve as a transparency mechanism, building and maintaining trust and accountability. Stringent record-keeping and reporting requirements will provide a comprehensive overview of operations.

It's important to stress that this bill is not just a theoretical exercise; rather, it represents a response to real-world challenges and events. Recent failures in prominent digital asset exchanges such as FTX, MyCryptoWallet and Blockchain Global Limited highlight the urgent need for consumer protections. This proposed legislation would have safeguarded consumers during these crises.

To ensure effective operation, the bill empowers ASIC to monitor and enforce licensee requirements. Civil and criminal penalties are integrated into the legislative framework, serving as a deterrent against potential misconduct. The bill brings clarity to the sometimes murky waters of digital assets by providing clear definitions of digital assets, digital asset exchanges and stable coins. This regulatory certainty is essential to fostering a conducive environment for innovation while ensuring the protection of investors.

The economics committee's examination of the Digital Assets (Market Regulation) Bill 2023 shed light on the pressing need for a comprehensive regulatory framework in the digital asset space. Stakeholders, including Blockchain Australia, Ripple and Kraken, have acknowledged the bill as a foundational step towards regulatory certainty and affirmed its significance in shaping Australia's transition to a digital economy. Support for the bill stems from the understanding that it effectively addresses critical policy issues with the flexibility and practicality required by a rapidly evolving sector. Importantly, recommendations from stakeholders and the committee demonstrate a collaborative effort to enhance and refine the bill now before the Senate. Suggested amendments to exclude NFTs from the definition of 'regulated digital assets' reflect a commitment to a regulatory framework that aligns with technological advancements, while the call to extend the transition period from three months to nine months would provide businesses and regulators the necessary time to adapt and comply with the new regulatory regime.

The time has well and truly come for this bill. The Digital Assets (Market Regulation) Bill lays the groundwork for a secure, transparent and thriving digital asset industry in our country. It's a meaningful step towards fully embracing the opportunities presented by emerging technologies while providing the necessary consumer safeguards. I commend Senator Bragg for his efforts, and I commend the bill to the Senate.