The fintech chief of Australia’s security regulator states that blockchain and crypto are the technologies doing the same functions as current financial infrastructure, so they should not be considered as different asset classes when making legislation.
On March 11, a paper was presented at the Melbourne Money and Finance Conference in which Rhys Bollen, the head of fintech at the Australian Securities and Investment Commission, mentioned that crypto should be regulated on economic substance instead of the technological form.
Tokenized securities should come under securities laws, and stablecoins should initiate payment services legislation. He also mentioned that other bodies of crypto may fall under consumer protection laws.
What Did Bollen Further State?
The approach of Bollen differs from the crypto-aimed regulatory frameworks in different countries, such as the CLARITY Act in the US and the Markets in Crypto-Assets Regulation framework in Europe.
Bollen went on, mentioning that three prominent financial functions, including capital allocation, payments and risk management, have developed with technological advancements and that distributed ledger technologies like blockchain should not be treated differently.
The head of fintech also added that regulatory systems have so far adapted to technological change, from paper instruments to electronic records, without leaving foundational principles like consumer protection, market integrity and systematic stability.
The Australian crypto market has also been guided via ASIC Information Sheet 225, which mentions that current definitions of “financial product” and “financial service” under the Corporations Act can concern digital assets.
ASIC Information Sheet 225 is also aimed at the regulation of intermediaries instead of tokens, with Bollen mentioning that a lot of consumer harm in the digital asset industry has originated from the conduct of crypto platforms providing custody, trading, lending or yield services.
Bollen confirmed that diversification issues may originate with decentralised products or services; also, he mentioned that legal analysis should aim at practical control and profit instead of formal claims of decentralisation.
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