The Legacy of the 'Fintech' Senate Committee: What is done?
Review of three reports and government response
Between 2020 and 2021, the Senate 'Fintech' Committee processed 224 submissions, held 14 public hearings, and published 3 reports.
In 2024, the Australian Government responded to the first of these reports.
Across the three reports, there were 15 recommendations—among others—directly related to the crypto space. The government's formal response addressed only one of these, concerning Initial Coin Offerings (ICOs), essentially stating that it is no longer relevant.
The government has undertaken several initiatives to address the recommendations from the second and third reports. Some of these are still in the preparatory stage.
Senate Select Committee
The Australian Senate Select Committee on Financial Technology and Regulatory Technology, later renamed the Select Committee on Australia as a Technology and Financial Centre, undertook a significant inquiry into the burgeoning FinTech and RegTech sectors. Across three reports published between September 2020 and October 2021, the Committee made numerous recommendations aimed at fostering innovation, competition, and regulatory clarity, particularly within the rapidly evolving digital asset space.
This article focuses specifically on the recommendations directly related to the crypto and blockchain industry—including digital assets, cryptocurrencies, NFTs, stablecoins, and DAOs—and highlights the Government's response.
First Interim Report (September 2020)
This initial report provided a broad overview and made several "quick win" recommendations. Only one recommendation directly touched upon the crypto space:
Recommendation 12: Initial Coin Offerings (ICOs): The committee recommended that the Australian Government release the final Treasury report on Initial Coin Offerings when completed.
Government Response (May 2024):
The Government noted Recommendation 12 but stated that "given the passage of time since this report was tabled, a substantive Government response is no longer appropriate".
Second Interim Report (April 2021)
The second report delved deeper into specific areas, including blockchain and digital assets. Key recommendations included:
Recommendation 14: Blockchain Standards: The Council of Financial Regulators Cyber Working Group should ensure its work considers existing and emerging international data standards for blockchain and smart contracts, liaising with Standards Australia.
Recommendation 15 & 16: National Blockchain Roadmap: The Department of Industry, Science, Energy and Resources (DISER) should regularly publish information on the implementation and evaluation of the National Blockchain Roadmap and review/update it as appropriate.
Recommendation 17: Blockchain Land Registry: National Cabinet should consider supporting a blockchain land registry initiative as a pilot project for Commonwealth-State cooperation on RegTech.
Recommendation 18: Smart Contracts: The Australian Government should prioritise improving clarity regarding the legal standing of smart contracts under Australian law.
Government Response:
To date, the government has not issued any formal response to the second interim report.
Final Report (October 2021)
The final report provided a comprehensive set of recommendations specifically focused on the regulation of digital assets and cryptocurrencies.
Recommendation 1: Market Licensing for DCEs: Establish a market licensing regime for Digital Currency Exchanges (DCEs) under the Treasury portfolio, including capital adequacy, auditing, and responsible person tests.
Recommendation 2: Custody Regime: Establish a custody or depository regime for digital assets with minimum standards under the Treasury portfolio.
Recommendation 3: Token Mapping: Conduct a token mapping exercise (led by Treasury with input from regulators/experts) to classify digital asset tokens for regulatory purposes.
Recommendation 4: DAO Company Structure: Establish a new Decentralised Autonomous Organisation (DAO) company structure.
Recommendation 5: AML/CTF Regulations: Clarify Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regulations to ensure they are fit-for-purpose for digital assets, do not undermine innovation, and consider the driver of the FATF 'travel rule'.
Recommendation 6: Capital Gains Tax (CGT): Amend the CGT regime so digital asset transactions only create a CGT event when they genuinely result in a clearly definable capital gain or loss.
Recommendation 7: Tax Discount for Green Mining: Amend legislation so businesses undertaking digital asset 'mining' using self-sourced renewable energy receive a 10% company tax discount.
Recommendation 8: Retail CBDC Review: Treasury should lead a policy review on the viability of a retail Central Bank Digital Currency (CBDC) in Australia.
Recommendation 10: The committee recommends addressing the issue of debanking, where banks close accounts belonging to individuals or businesses that engage in cryptocurrency or other digital asset transactions.
Government Response:
To date, the government has not issued a formal response to the second interim report. However, several steps have been taken:
The Treasury conducted a Token Mapping exercise.
The ATO clarified How to work out and report CGT on crypto.
The RBA launched two pilots on central bank digital currencies (CBDCs), one of which has been completed (СBDC Pilot), while the other is ongoing (Project Acacia).
ASIC proposed bringing all crypto under existing financial regulation, including classifying stablecoins as financial products, in its INFO 225 Update Proposal.
In 2023, the Treasury proposed regulating exchanges and custody services under a new Digital Asset Platform regulatory regime; however, it has not yet been enacted.
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Conclusion: An Unfinished Legacy?
The Senate Committee reports proposed a potential roadmap for Australia to manage the complexities and capitalise on the opportunities presented by the rapidly changing digital asset and blockchain landscape. The recommendations aimed to establish a regulatory environment that fosters innovation while ensuring consumer protection and market integrity.
However, based on the provided government response document (dated May 2024), which only addressed the first interim report and deemed specific responses inappropriate due to time elapsed, implementation of the blockchain land registry has been abandoned, and de-banking has not been addressed. The industry still awaits clarity on many fronts, including the tax treatment of crypto-transactions and specific licensing and custody regimes, which will be critical for Australia's competitiveness as a technology and financial hub. While the Committee's work highlighted key areas for reform, further assessment is required to determine the extent to which its crypto-specific recommendations have been translated into concrete policy action, as this extends beyond the scope of the provided government response document.