Susan McDonald (Queensland, National Party, Shadow Minister for Resources) Share this | Hansard source

I wanted to speak following Senator O'Sullivan and associate myself with his remarks, which were well made and balanced. I also want to commend Senator Bragg for bringing forward this important piece of legislation, the Digital Assets (Market Regulation) Bill 2023. It is urgently required.

It is the role of the parliament to legislate where required, and what we've seen is an industry that is moving faster than government. We've seen an industry that is engaged in currency transfers. Digital assets across the board are moving faster than our regulators. It is unfortunate that the government has taken the road of inaction, as is their usual form—very slow reviews and inaction on something that is moving quickly. It is imperative that the Australian government move to regulate digital assets, because, in the absence of that, Australians are left unprotected. And this is happening right now.

We know that cryptocurrency is being used on the dark web. We know that it is being used by drug traffickers and we know that it is being used in all sorts of nefarious activities—as well as appropriate ones; I'm not suggesting that that is its only purpose. But the absence of appropriate regulation leaves Australians unprotected and it leaves criminal elements able to act with impunity. If Minister Jones is unwilling to act, then it is the responsibility of people like Senator Bragg, who is well informed and up to date on matters such as this, to bring forward private senators' bills, and I really do commend him for that.

We have seen that it is possible for the government to move quickly when necessary. We saw recently the bipartisan approach to national security around the placement of an embassy. We have seen other occasions when the government has been forced to take urgent action to protect Australia's interests and there has been bipartisan support, both during the term of this government and previously. This is another element where it is the responsibility of government to provide some leadership, to move quickly to protect Australians and Australian businesses. As I say, Senator Bragg, who has deep knowledge in these areas, has taken that leadership role.

There has been discussion already about the Digital Assets (Market Regulation) Bill 2023, which creates a licensing regime for digital assets, with custody, disclosure and minimum capital requirements that will give consumers protection and the market certainty. This bill proves that an Australian crypto bill is entirely viable. It builds on the work of the previous government and picks up the work of comparable jurisdictions. It would provide a legislative framework to regulate digital assets. This is absolutely achievable. The inaction by the government has forced the regulator, ASIC, to utilise the powers that it does hold to the extent that they apply to digital asset-type products, but the regulator cannot make the law, and so we have left the regulator hamstrung in this regard in managing cryptocurrencies and digital assets. ASIC has no power to protect consumers without appropriate regulation.

It's no secret that the government has been flat-footed on regulatory reform in areas of society and the economy that are moving more quickly than the government is able to keep up with. It was a shocking situation last October when there was an inability for NOPSEMA to have appropriate regulation to make decisions on important economic investments in this country. The government has remained flat-footed and done nothing to provide greater certainty and transparency around that kind of regulation. So it is no surprise that here in the crypto world the government has remained flat-footed, confused. I'm not sure exactly what it is that they think their reluctance to move will achieve, apart from putting Australians—Australian consumers and Australian businesses—into a more exposed position. But they are also not supporting our legal enforcers. Where are the regulations and the legislation that would provide those agencies with the tools to be fighting these criminal underworld gangs? Regulations and legislation would help ASIC, in the economic sense, and even some of our other enforcers—the Australian Federal Police and others. This absence of regulation leaves our enforcers without the tools to defend Australians against the sort of activity that is going on.

Under this proposed legislation the licence holders will be subject to various obligations, and it would be developed in consultation with industry and community. These obligations would include: minimal capital requirements to provide a buffer in downturn scenarios; segregation of consumer funds to ensure that those funds are not tied up with corporate funds in the event that a digital currency exchange or custody service declares bankruptcy; governance standards to bring the industry up to par with other financial services and products; disclosure requirements to both participants and government agencies; and of course record keeping and recording requirements. The bill would require minimum reserve standards to ensure that stablecoin issuers hold in reserve the full amount of their face-value liabilities on issue in accounts kept with an authorised deposit-taking institution in Australia. This would provide consumers with the minimum standard of consumer protection.

We are very proud of the stable banking system we have in Australia. It allowed us to work through several downturns, including the most recent supply shocks that we had during the COVID pandemic, and previously. It is shocking that we have a new currency system, a new area that consumers are exposed to, that remains unregulated. Consumers remain unprotected. And yes, I've already said that, and I will continue to say that, because it is shocking that the government remains flat-footed on what is a very basic protection element. We had a good fintech inquiry during the last government, very ably chaired by Senator Bragg, and the deputy chair was Senator Marielle Smith.