ROSS GREENWOOD:
Well, on Monday, I had a go at the government for consulting over the future regulation of crypto players, when in my opinion, more action is needed right now. This is about a proposal. Crypto exchanges and digital asset platforms should be subject to Australian Financial Services laws and also be required to hold an Australian Financial Services licence. And my point is that after the collapse of FTX, the government should not consult on this stuff. It should simply act before it's too late. Now, one man who can act is the Assistant Treasurer, Stephen Jones, who joins me now. Stephen, always good to chat to you. Just explain to me why you're consulting for another twelve months on this when, in my opinion, bring in these regulations right now, licence them, make certain that they comply with Australian law.
STEPHEN JONES:
Well, we've published on Monday our clear intent to do exactly that, to ensure that we bring crypto platforms into the financial mainstream by requiring that they have an Australian Financial Services licence. That bit's easy. The conditions which will attach to that licence, which are different and bespoke to the crypto currency and the crypto asset industry, is not straightforward and not so easy. And it's the details of that that we've got some consultation proposals, not for a year, I think we've given industry until the 1 December to get back to us. On the basis of that, we'll be drafting legislation to introduce early next year. A couple of things, Ross, we want to ensure that industry has certainty so that it can innovate within some firm guidelines. But it's about customer protection, it's about consumer protection, and we don't want to see the sorts of things that have gone on and continue to go on in other countries happening here in Australia. So, with licensed approval, with clear guidelines, we'll be lifting the bar. And you know what, there'll be some players that exit the industry. That's fine. There is an entry price to having the tick of approval by the Australian Government to operate as a financial service licenser – licensee. And if you can't meet those standards, then frankly you don't have a place in the industry.
GREENWOOD:
Because even you make the observation that 50,000 Australians were caught up in that FTX collapse. So, that's 50,000 Australians that have either lost money or been affected in some way, shape or form, this is where, in my opinion, the action is required and you're taking the action. But it's also the issue of trying to not stifle innovation, I heard you say. So, where do you get that balance right?
JONES:
Well, if we think we do have the balance right, by licensing the point of exchange where somebody buys a crypto asset, they use Australian currency or they use real world currency to buy a crypto asset and perhaps the exchange or the platform has custody of those assets. What we saw go wrong with FTX is they then used those crypto assets that were held in custody to go and invest in other assets and other businesses that were run by the same principles. It was pretty dodgy stuff. What we're proposing to do is put in place new standards which would prevent an Australian based exchange or an Australian licensed exchange from doing what went on in FTX. Now, important point to make, Ross. We'll be legislating to the extent of our capacity. That is, for businesses that are licensed here in Australia. That won't mean that somebody can't get on their computer and go to an exchange which is operating somewhere else outside our jurisdiction. But it will mean that customers who are looking for an approved exchange for a licensed exchange will know what to look for. And it will mean that investors and innovators who want to be a part of a legitimate operation which is committed to innovation, but also committed to removing criminal elements, removing scam activity and all the dodgy stuff that we've seen be a part of some of these operations. They know that if it's an Australian licensed operation that'll have high standards applying to it, and if it's not Australian licensed, then buyer beware.
GREENWOOD:
Tell you what, Stephen Jones, always good to have you on the program and many thanks for your time today.
JONES:
Good to be with you.