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Australia Now On The (Token) Map

February 20, 2023

Australia’s recent announcement of a Token Mapping Consultation has generated much interest (and circumspection) in the crypto community. One of the main aims of the consultation from The Treasury’s Crypto Policy Unit is to map out the existing regulatory framework against crypto products and services, their uses and ecosystems. By doing so, it hopes to inform future policy development and encourage innovation with appropriate regulatory oversight. The crypto industry is rapidly evolving and, given the continued market adoption of various crypto assets, this consultation is certainly welcome.

Whilst it is termed a token mapping exercise, the paper initially assesses the ecosystem against a ‘functional perimeter’ which is intended to map facilities through which a person can (a) make financial investments, (b) manage financial risks or (c) make non-cash payments. Whilst certain inclusions and exclusions are mentioned, the “token mapping” seems to concentrate on a finance-related function. However, other concepts like record-keeping tokens, DAOs and even in-game crypto token items are also covered. One important outcome from this consultation is understanding whether reforms will be limited to products and services involving a ‘functional perimeter’ or whether a broader market will be captured.

It will also be fundamental to consider regulations and frameworks in the context of a global market and audience. Tokens, and token systems, by their design involve participants from across the world, and such participants are often also anonymous. Many regulators have launched their own consultations with particular aims and priorities, but to truly “map” this, it cannot be done in a vacuum and there must be coordinated reviews, responses, standards and protocols amongst regulators to ensure there continues to be a balanced regulatory environment whilst ensuring all stakeholders can benefit from an evolving technology.

Feedback on the consultation is due 3 March 2023. The Treasury will propose a framework for custody and licensing for public comment in mid-2023 after reviewing feedback from this consultation.