By Maria Irene
The Australian Treasury has released a public consultation paper outlining its proposed taxonomy for crypto assets as the government moves towards regulating the market. The paper, which was released on February 3rd, aims to inform the development of a policy that is “fact-based, consumer conscious and innovation-friendly”.
The taxonomy is based on a functional and technology-neutral method and outlines the basic definitions of key concepts in the crypto industry, including crypto networks, crypto tokens, and smart contracts. A crypto network is defined as a distributed computer system that can host crypto tokens, while a crypto token is a unit of digital information that can be used or controlled by an individual who doesn’t manage the host hardware where the token is recorded. A smart contract is computer code that is published to a crypto network’s database and can perform functions without intermediaries or agents.
The paper does not provide any legislative initiatives but suggests that a large portion of the crypto ecosystem can be regulated with existing laws, while pockets of the ecosystem that are managed by public, self-service software may require a new legislative framework. The treasury is seeking feedback on the consultation paper until March 3rd and will release a similar paper on a licensing and custody framework for crypto in mid-2023.
This move towards regulation comes as the UK’s financial authority, His Majesty’s Treasury, also published a consultation paper on crypto regulation. The UK’s paper emphasized that existing legislation, such as the Financial Services and Markets Act, has the capacity to cover digital assets and that separate legislation is not necessary.