The third and final report of the Senate select committee on Australia as a technology and financial centre did not deem laws needed to be tweaked to allow financial advisers to give advice on cryptocurrency, despite arguments to the contrary.
Several submitters argued for the introduction of an Australian Financial Services financial product category that covers crypto assets so that financial planners can provide licensed financial advice in relation to these assets.
Among them, Blockchain Australia recommended that a new licensing regime, modelled off the existing AFSL, be developed so that entities that wish to provide general or personal financial advice in relation to crypto assets as part of their business model can be authorised.
“A new licensing category, modelled off the requirements to hold an AFSL, that allows for the provision of crypto asset financial advice would allow competent and qualified advisers to provide advice that is tailored to an individual and takes into account their circumstances and risk profile,” Blockchain Australia said.
“A new category of licensing would avoid the problems that would arise by attempting to fit crypto assets into a framework that is not suited to these assets.”
However, the committee did not deem such a recommendation necessary.
The committee instead recommended changes to taxation law, new regimes for market licensing for digital currency exchanges (DCEs), custodial and depository services for digital assets, and a review of the anti-money laundering regulations in a bid to increase Australia’s appeal to global digital and crypto-asset businesses.
New DAO structure most exciting
The report’s recommendation to establish a new Decentralised Autonomous Organisations (DAO) company structure has garnered the most attention, with RMIT’s Dr Aaron Lane branding the change, if legislated, “the most significant reform to corporate law in two decades”.
“Blockchain and cryptocurrency is not just about providing new types of financial products — this technology is the infrastructure for new ways of governing economic exchange,” RMIT Blockchain Innovation Hub research fellow Dr Aaron Lane said.
“Providing DAO members with the option of a limited liability company structure will encourage talent and investment in Australia.”
DAOs are common law partnerships, syndicates or unincorporated associations whose activities and investment decisions are co-ordinated by code or smart contracts.
Currently, DAOs and other blockchain projects with decentralised governance structures are not readily recognised within existing regulatory categories under Australian law.
According to the CEO of BTC Markets, Caroline Bowler, the recommendation to establish a new DAO company structure is “a very forward-looking inclusion in giving customers greater choice and will be hugely advantageous for reasserting Australia’s position as a centre of innovation”.
I don’t see why existing licensees cannot provide approval for advisers to advise on a crypto asset – There is no legislation on what must be on an AFSL. If the adviser folows BID and provides compliant and reasonably asserted recommendations, and is also willing to take the risk involved in recommending such an asset then all the power to them. This is why individual licensing is so crucial. Being burdened by a licensees deifintion of what is/is not a good investment is in direct contrast with the purpose of reform to tranform advisers into “professionals”
I, as a professionally educated and trained financial adviser ought to have the capacity to make financial recommendations within the law. Right now, the law DOES NOT forbid giving advice to crypto assets. The licensee does.
I think you need to read the AFSL for your licensee which clearly sets out the types of investments on which you are licensed to provide advice.
I know our licence defintiely does not and crypto-currencies are not an investment product as defined in the Corporations Act under this licensing regiem.
So it is not the licensee which frobids advice on crypto assets, it is the regulator and the licences they issue. You obviously do not run a licensee or you would not make this statement.
Nick, adding further to Laurie’s comments, even if you were able to argue that Crypto investing would/should be okay under your AFSL terms, good luck getting PI Insurance to cover you for this! I am a one man band Licensee who has to annually fill in the insurer’s 20+ page application, as well as submit numerous attachments; now if I were to tick the crypto box I can only imagine the hell that would rain down on me. Remember, no PI Cover, no advice business.
Who needs to pay for financial advice on Crypto when you get it free on Tik Tok and Twitter :).
Same can be said for all financial advice?
The US and others have launched ETF’s centred around Crypto. While the risk is certainly there, is the risk any different to investing in small companies or emerging markets. Once again ASIC fools hold back investors for sheer ignorance…..suppose they were against tech funds as well back in the late 90’s. Yet somehow are okay with funds collapsing such as Timbercorp Great Southern Trio Capital and many unlisted property trusts that have collapsed. These fools have no idea and are cluless to govern financial services. Period !
No fundamentals to provide advice on…pure speculation…unless of course you’re trying to convince yourself. Convinve Hamish Douglass then I might be tempted to look at Crypto – he calls it the greatest fraud perpetuated on mankind this century…given he’s a bilionaire, I’m inclined to believe him.
Has Shoes, there is a difference between digital assets that are deemed “cryptocurrency “ and those that are not but still blockchain related. Warren Buffet: Years ago, he noted that bitcoin is “probably rat poison squared” and an unproductive asset with “no unique value.” In 2018, he commented that Berkshire Hathaway will “never have a position in [cryptocurrencies].”
Jamie Diamond (JP Morgan) : has made his contempt for cryptocurrency clear, calling it “worthless” during the great crypto boom in October 2021. But now, he says, he has stopped even calling them “currencies.”
Internet brought many advancements…..well just wait until you see what blockchain will do.