Why Australia needs better crypto regulation

Australia is at an inflection point with cryptocurrency.

While it is continuing to become a mainstream asset class for Australian investors, a lack of regulation is acting as a barrier to cryptocurrency fulfilling its true potential in the market.

Proper rules and guidelines are the key to unlocking other uses for cryptocurrency that will modernise the Australian economy, and politicians are now moving quickly to try to fill the gap.

Regulation provides guardrails for industry players, helps protect consumers and instils confidence in investors.

More Australians are choosing to invest in crypto, but many others have been discouraged by the absence of these benefits and protections, which is acting as a handbrake to further mainstream adoption.

Having been in Canberra with senior politicians and bureaucrats over the past few weeks, it's clear that all sides of politics are working to put these protective measures in place.

Many politicians have acknowledged that with the inauguration of Donald Trump creating a bull-run in the crypto market and consumers increasingly interested in the investments, they need to act quickly to ensure their constituents are better protected.

The state of play on crypto regulation in Australia

Frameworks and safeguards for protecting consumers come through two channels in regulation and legislation.

Regulations are created by the Australian Securities and Investments Commission (ASIC), while legislation is formed by politicians in Canberra. Both focus on protecting consumers and their investments.

In November 2024, ASIC released Info Sheet 225, a consultation paper which sought to identify ways to protect Australian investors by providing greater accountability and licensing requirements for market operators, such as crypto exchanges.

This process is ongoing and we are unlikely to see the outcome until after the Federal election in May.

Many industry stakeholders saw this proposal as too cumbersome on crypto companies with a view that its harsh requirements, particularly around licensing, would stifle innovation and force firms offshore.

I believe it is important that the final policy aligns with the views of the incoming government - regardless of which party wins the next election - to ensure consistency and streamline reform.

As Australia heads to the polls next month, both major parties are demonstrating that they are committed to deliver a regulatory framework that protects consumers and encourages investment in the industry.

Prime Minster Anthony Albanese took on a dedicated digital assets adviser in late 2024, and both parties have formed crypto working groups with external stakeholders to incorporate a range of perspectives into their policy platforms.

Both major parties have now released their policy platforms and it's pleasing to see that they offer a more balanced approach than some of ASICs strict licensing proposals.

The proposed policies make it easier for crypto companies to operate efficiently, while maintaining consumer protections.

In our view, the government elected in May must act quickly within the first few months of office to introduce a comprehensive roadmap and timeline for crypto legislation.

This is fundamental to restoring confidence for businesses by demonstrating that Australia is taking crypto seriously. It will also protect consumers at a time of heightened interest and demand.

Where politicians are seeing the future of crypto in Australia

From my discussions in Canberra, it's clear that our leaders are looking to three main areas where they expect cryptocurrency to form part of the future of everyday finance, outside of investing. These are: stablecoins, payments and tokenisation.

Stablecoins

Stablecoins are a type of cryptocurrency that hold a stable value by being linked to another asset such as the US dollar.

Stablecoins are piquing regulators' interest, as they can reduce transaction costs, speed up money transfers and allow global payments, for imported and exported trade for example, to be made seamlessly between countries.

Politicians from all sides of the political spectrum are excited by these benefits, underpinned by a deeper desire to ensure that Australia is at the forefront of innovation, which starts by modernising our economy.

Payments

Politicians are eager to foster innovation within payments more broadly.

They acknowledge that providing more opportunities for Australians to pay with crypto for everyday goods and services can reduce fees and expand choices for customers. For example, through Crypto.com Pay, customers can pay in-store using crypto at more than 440 retail outlets.

This is a direct end to end transaction, without a fiat currency conversion, so fees are minimised and the merchant is paid in Australian dollars.

There is a desire to see innovations like these made available to all Australians in years to come, to again facilitate innovation and improve consumer choice.

Tokenisation

Tokenisation is another underutilised benefit of crypto within the Australian market, which politicians are seeking to better incorporate throughout the economy.

Tokenisation works by creating a digital representation of an asset to demonstrate ownership rights. In our discussions with politicians, they were eager to explore the idea of tokenising ASX shares, so that much like crypto, they could be traded 24/7, rather than 10am to 4pm.

So, where to now?

With the election now only a few weeks away, it is important that Federal Parliament does not lose sight of the need to introduce legislation. The industry and Australian consumers cannot afford to be heading into 2026, still in limbo and without a clear direction.

A failure to act could result in firms moving offshore, investment going abroad and continued vulnerability for consumers.

In short, Australia risks being left behind. Our nation is at an inflection point with harnessing the benefits of crypto and we must grab it with both hands.

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