Crypto Assets and the Challenges for Regulatory Design

This article discusses the challenges for regulatory design in the area of crypto assets and suggests the likely direction of reform in Australia. It examines the challenges by reference to the definition of crypto assets, questions that are relevant to the regulation of crypto assets, the current regulatory framework for crypto assets in Australia, and the likely direction of reform in Australia. In terms of the likely direction of reform, the article suggests a move away from a prescriptive, rules-based approach to regulation in favour of a more principles-based approach, the expansion in the regulatory net to include providers of crypto-asset services, and the conferral of greater powers and flexibility on regulators to adapt to challenges brought about by technology.

By Andrew Godwin^[1]

The past decade has seen extraordinary growth in technological innovation. The emergence of blockchain technology (and distributed ledger technology more broadly) has led to a range of innovations in area such as financial services. These innovations include new ways of raising finance, such as initial coin offerings (“ICOs”), new means of exchange for payment purposes, such as cryptocurrencies, and new asset classes, such as crypto assets (which include cryptocurrencies and tokens more broadly); and new forms of business, such as decentralized autonomous organizations (“DAOs”). The new terminologies and taxonomies that have emerged alongside these innovations have pr