ASIC's Chair Recognizes Crypto's Rise as Phenomenal and Impossible to Ignore
Australian regulator says that cryptocurrency 'is at our doorstep' and admits a fascination with DAOs
Crypto is Here
Joe Longo, the chairman of Australia’s Securities and Investment Commission (ASIC) recognizes that consumers and investors are driving the demand for crypto, and rules are developed to oversee this. The securities regulator spoke at the Australian Financial Review’s Super & Wealth Summit on Monday acknowledging that crypto is no longer ‘at the fringes of financial of the financial services market’.
Joe Longo said, “Wherever we land from a policy perspective, Senator Bragg’s committee was right to highlight the fact that crypto is on our doorstep, here and now, and being driven by extraordinary consumer and investor demand.”
Mr. Longo also spoke about Decentralized Autonomous Organizations (DAOs) and how DAOs may pose challenges to the regulators. Regulators will often turn to the ‘directing mind and will’ of an organization or institution for accountability. However, this may not be possible in a DAO structure of governance. Hence, it is unclear how DAO can be held accountable in court.
Balancing Between Innovation and Regulation
Regulators are often targets for criticism that they stifle innovation. In his address, Mr. Longo clarified that ASIC is not here to eliminate risk.
He said, ‘Risk taking and encouraging innovation is an essential part of Australia’s financial system and economy. But where industry has neglected to take its share of responsibility, ASIC will not hesitate to deploy the powers in our regulatory toolkit…’
This is an assuring approach to crypto-assets by a chief regulator. Considered and proportionate action is only necessitated when there is harm or wrongdoing. The policy that underpins the regulatory framework is to encourage industry players into the space with minimal intervention unless the conduct is reprehensible.
This approach, if benchmarked against the regulatory stance taken by American regulators is a stark contrast. The American approach has been criticized by Senators such as Pat Toomey for its failure to proactively provide the ‘rules of the road’ to the industry.
Banking Sector is Opening Up to Crypto
Australia is seeing a rather inclusive approach by the traditional financial providers. Earlier this month, the Commonwealth Bank of Australia (CBA) has allowed its customers to hold and use cryptocurrencies. This is a positive step in acknowledging its customers’ needs.
The demand-driven nature of crypto assets is forcing institutions to open their doors. This also means, cryptos such that more volatile such as meme coins would also be given the same treatment as Bitcoin or Ethereum and this poses a huge problem to the consumers. The answer lies not in censorship but through education.
Regulators cannot entirely eliminate risks for the investors. Volatility and risks exist in all markets and it is not an attribute peculiar to the crypto world.
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