The Senate Select Committee on Australia as a Technology and Financial Centre (formerly the Senate Select Committee on Financial Technology and Regulatory Technology)'s third and final report, follows on from two interim reports delivered in September 2020 and April 2021.

In this final phase of the committee's inquiry, the committee took extensive evidence from businesses, industry groups, academics and regulators in relation to the regulation of digital assets in Australia, 'de-banking' practices affecting Australian FinTechs and other businesses, and several other issues relating to Australia's position as a technology and financial centre.

The committee's final report makes 12 recommendations across these areas, which will drive opportunities for innovative businesses, protect consumers, and enhance Australia's competitiveness. In particular, the committee's recommendations will provide, for the first time, a clear regulatory framework for the digital assets sector in Australia. This will enable Australia to match leading jurisdictions such as Singapore and the UK for investment and opportunity in this emerging sector.

List of Recommendations

Recommendation 1

6.16 The committee recommends that the Australian Government establish a market licensing regime for Digital Currency Exchanges, including capital adequacy, auditing and responsible person tests under the Treasury portfolio.

Recommendation 2

6.22 The committee recommends that the Australian Government establish a custody or depository regime for digital assets with minimum standards under the Treasury portfolio.

Recommendation 3

6.28 The committee recommends that the Australian Government, through Treasury and with input from other relevant regulators and experts, conduct a token mapping exercise to determine the best way to characterise the various types of digital asset tokens in Australia.

Recommendation 4

6.36 The committee recommends that the Australian Government establish a new Decentralised Autonomous Organisation company structure.

Recommendation 5

6.41 The committee recommends that the Anti-Money Laundering and Counter-Terrorism Financing regulations be clarified to ensure they are fit for purpose, do not undermine innovation and give consideration to the driver of the Financial Action Task Force 'travel rule'.

Recommendation 6

6.51 The committee recommends that the Capital Gains Tax (CGT) regime be amended so that digital asset transactions only create a CGT event when they genuinely result in a clearly definable capital gain or loss.

Recommendation 7

6.56 The committee recommends that the Australian Government amend relevant legislation so that businesses undertaking digital asset 'mining' and related activities in Australia receive a company tax discount of 10 per cent if they source their own renewable energy for these activities.

Recommendation 8

6.61 The committee recommends that the Treasury lead a policy review of the viability of a retail Central Bank Digital Currency in Australia.

Recommendation 9

6.72 The committee recommends that the Australian Government, through the Council of Financial Regulators, enact the recommendation from the 2019 ACCC inquiry into the supply of foreign currency conversion services in Australia that a scheme to address the due diligence requirements of banks be put in place, and that this occur by June 2022.

Recommendation 10

6.76 The committee recommends that in order to increase certainty and transparency around de-banking, the Australian Government develop a clear process for businesses that have been de-banked. This should be anchored around the Australian Financial Complaints Authority which services licensed entities.

Recommendation 11

6.79 The committee recommends that, in accordance with the findings of Mr Scott Farrell's recent Payments system review, common access requirements for the New Payments Platform should be developed by the Reserve Bank of Australia, in order to reduce the reliance of payments businesses on the major banks for the provision of banking services.

Recommendation 12

6.84 The committee recommends that the Australian Government establish a Global Markets Incentive to replace the Offshore Banking Unit regime by the end of 2022.

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