Australia’s Financial Services Minister Stephen Jones has conceded to the argument of regulating virtual assets as financial products on the grounds that there are “good arguments” in support of the move.
The Sydney Morning Herald (SMH) reports that the Minister’s stance hinges firmly on FTX’s collapse at the tail end of 2022, making it imperative for legislators to weigh in. Jones disclosed that the best approach for regulators is a pragmatic one which begins with a consultative process to capture the dire necessities.
“I don’t want to pre-judge the outcomes of the consultation process we are about to embark on. But I start from the position that if it looks like a duck, walks like a duck and sounds like a duck then it should be treated like one,” Jones said.
The minister clarified that he was firmly against creating a new regulatory regime for the entire asset class when a proper framework for regulating financial products currently exists.
“Other coins or other tokens are being essentially used as a store of value for investment and speculation. [There is a] good argument that they should be treated like a financial product,” Jones noted.
Currently, two schools of thought dominate the discussion on the best ways to regulate virtual currencies. The first, touted by the Australian Securities and Investments Commission (ASIC), argues for regulators to classify all virtual assets as financial instruments.
The second group, spearheaded by Blockchain Australia, stands against treating all digital assets as virtual currencies, which it says could affect investments in the sector.
Bracing for sweeping changes around the world
FTX’s implosion sparked a flurry of regulatory activity worldwide as policymakers scrambled to prevent a repeat of the black swan event. The fallout of the event is the drastic change of stance by regulators towards the industry, with several regulators viewing the asset class as financial products.
Stablecoin issuers appear to be the hardest hit by the incoming regulatory avalanche, with the U.S. and European policymakers pining for them to be regulated similarly to financial regulators.
Other virtual currency service providers have been slammed with the additional burden of complying with heightened regulatory requirements, such as ensuring proper custody of funds and backup plans in the event of a large-scale collapse.
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