A globally consistent approach to crypto regulation is “very important” because crypto is a global phenomenon, Tobias Adrian, the financial counsellor and director of the IMF's Monetary and Capital Markets Department, said on a new IMF podcast series
“Ideally, every country in the world is aligned in terms of how they regulate crypto,” said Mr Adrian.
According to Mr Adrian, with just five firms controlling the vast majority of the market share globally - including the likes of Coinbase, FDX and Finance - the idea is to regulate those market infrastructures with data integrity, operational resilience and prudential oversight.
“We understand how to regulate infrastructures and this knowledge can be applied to these entities,” he explained.
Stablecoins, Mr Adrian noted, could be regulated like banks.
“Certain stablecoins could have banking licenses. Other stablecoins could be more like money market funds. So they could be more like tokenised money market funds,” he noted.
Locally, the government is expected to head towards regulating these market infrastructures, although no policy position has been vocalised to date.
Namely in March, the Treasury - under the Liberal Coalition government - released its consultation paper on a proposed regulatory framework for crypto-asset secondary service providers.
The framework proposed a tailored licensing framework for crypto-asset secondary service providers, which would sit beside the existing Australian financial services (AFS) and market licensing regimes for crypto-asset financial products.
In essence, this would propose obligations on firms that provide access to crypto-assets and custodial services.
Submissions to the consultation ended in May and while the review was actioned by the previous government, Labor is expected to continue in a similar direction.
In its submission to government, which it publicised last week, FinTech Australia called for any changes under the proposed regulatory framework to be targeted and measured.
The organisation said that its members viewed the proposed policy objectives outlined by the consultation paper as “broadly appropriate” but argued for more general consumer protections along with an emphasis on promoting innovation.
“An additional policy objective should be included to incentivise innovation and business,” FinTech Australia said.
“This industry provides a significant economic opportunity for Australia to become a world leader. A measured, consistent and pragmatic regulatory framework will lay the foundations for Australia’s continued success in this sector.”