The Australian Treasury has taken a step forward in regulating the cryptocurrency market by releasing a consultation paper on “Token Mapping.” The paper outlines a foundational approach to policy development aimed at being “fact-based, consumer conscious, and innovation-friendly.”
Defining Crypto Assets
The paper defines the basic concepts of crypto networks, tokens, and smart contracts. A crypto network is a distributed computer system that hosts tokens, while a crypto token is a unit of digital information that a person can exclusively use or control. A smart contract, on the other hand, is computer code published to a crypto network’s database that intermediaries can use to perform functions.
Taxonomy of Crypto-Related Products
The consultation paper proposes a taxonomy of four types of crypto-related products:
- Crypto Asset Services – This category includes lending and borrowing, fiat on/off ramping, trading, funds management, mining/staking-as-a-service, gambling, and custody.
- Intermediated Crypto Assets – This class includes stablecoins and covers rights or licenses in relation to event access or subscriptions, intellectual property, reward programs, consumer goods and services, fiat money, non-financial assets, and government bond coupons.
- Network Tokens – This is a new type of currency used for peer-to-peer payment infrastructure, such as Bitcoin.
- Smart Contracts – These exist on a spectrum from “intermediated” to “public.” Intermediaries use intermediated smart contracts to provide services, while public smart contracts remove the need for intermediaries.
Read More: The National Australia Bank Will Launch a Stablecoin Backed by Australian Dollars
Legislative Framework
The authors of the paper anticipate that existing laws can cover a large portion of the crypto ecosystem, but a brand-new legislative framework may be necessary for functions ensured by public, self-service software. The Treasury will accept feedback until March 3, and the next step in the national regulatory discussion will be the release of a similar paper on the possible licensing and custody framework for crypto in mid-2023.
UK’s Approach to Crypto Regulation
In contrast, the UK’s financial authority, His Majesty’s Treasury, recently released its consultation paper for crypto regulation and emphasized that the existing Financial Services and Markets Act covers digital assets, negating the need for separate legislation.
In conclusion, the release of the consultation paper on Token Mapping by the Australian Treasury marks a significant step in the government’s multi-stage reform agenda to regulate the cryptocurrency market. The paper provides definitions for basic crypto concepts and a proposed taxonomy of crypto-related products, laying the foundation for further policy development.
