In March 2022, the Federal Government issued Terms of Reference requesting the Council of Financial Regulators, AUSTRAC, ACCC and the Department of Home Affairs to provide advice on potential policy responses to address de-banking relating to financial technology firms, digital currency and remittance providers. In the Terms of Reference, “De-banking” was described as “(or de-risking) occurs when a bank declines to offer or continue to provide a banking service”. This was to be undertaken in consultation with a range of key stakeholders.

In August 2022, the Council released a report entitled “Potential Policy Responses to De-banking in Australia”. According to the Executive Summary, policy proposals included:
1.    Collect de-banking data
2.    Introduce transparency and fairness measures
3.    Advise the major banks of the Government’s expectation that they provide guidance on their risk tolerance and requirements to the affected sectors 
4.    Consider funding capability uplift within the affected sectors. 

Simultaneously in a joint media release, the Treasurer Jim Chalmers and Assistant Minister for Competition, Charities and Treasury Dr Andrew Leigh, promised to “improve the way Australia’s regulatory system manages crypto assets, to keep up with developments and provide greater protections for consumers”.

The media release noted that Treasury would prioritise “token mapping” work in 2022, which would help identify how crypto assets and related services should be regulated and suggested this would be revolutionary. They maintained that the procedure would involve identifying notable gaps in the regulatory framework, progressing work on a licensing framework, reviewing innovative organisational structures, and looking at custody obligations for third party custodians of crypto assets whilst providing additional consumer safeguards.

The process of “Token mapping”, in turn, “involves uncovering the characteristics of all digital asset tokens in Australia including charting the type of crypto asset, its underlying code, and any other defining technological feature”, according to the Sydney Morning Herald. (Wright, 2022).

Interestingly, a week later ASIC published a media release warning brokers considering high-risk offers to retail investors. ASIC stated:

With the growth in unregulated crypto-assets over recent years, some brokers have, or are seeking to, offer these products alongside shares and other regulated financial products through their trading apps. ASIC is concerned this may give investors a false sense of security, leading them to believe crypto-assets have the same protections as regulated financial products or they may underestimate the risks.

ASIC Commissioner Danielle Press went on to say “Crypto-assets are high-risk, volatile and complex. Brokers should think very carefully before offering crypto-assets through their share trading apps. The differences in risks and protections must be made clear to investors”.

A further 2 weeks on, in September 2022, on the basis that “The Labor Government believes cryptocurrency is a ‘scam’ and is starting its work from scratch”, Andrew Bragg Liberal Senator for NSW, released a draft bill for consultation. The draft bill is called the The Digital Assets (Market Regulation) Bill 2022 and is said to achieve the following:

• introduces licenses for: 

o Digital Asset Exchanges, 

o Digital Asset Custody services, and 

o Stablecoin Issuers:  (This includes requirements for Australian or foreign currency to be held in reserve in an Australian bank and for frequent reporting. )

• Establishes disclosure requirements for facilitators of the e-Yuan in Australia, as the e-Yuan is the first CBDC released by a central bank of a major economy. 

Consultation is open until 31 October 2022. 

Accordingly, there is much work going on in this space. Subscribers are referred to Law Relating to Banker and Customer where authors will monitor and report on further developments impacting the industry.

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