Tabling of Final Report from theSelect Committee on Australia as a Technology and Financial Centre

Senator Bragg: On behalf of the chair, I present the final report of the Select Committee on Australia as a Technology and Financial Centre together with accompanying documents.

I move: That the Senate take note of the report. Thank you for the opportunity to make a few remarks about this important report. This select committee was kicked off late in 2019 with a mandate to look at financial technology and regulatory technology. It has delivered already two reports with recommendations which have in large part been adopted and implemented. The whole point of having a parliamentary review of these issues is to ensure that Australians can be availed of the latest and greatest choice and opportunities of financial innovation, in particular, but also that we are appraised and aware of all the consumer protection needs which come with those technological developments. In relation to this final report, which is amongst the first parliamentary reports into cryptocurrency or digital assets anywhere around the world, this is a matter of interest to many Australians.

One in five Australians already has cryptocurrency, and this is a particular phenomenon which skews to younger people. Younger people are interested in digital assets and cryptocurrency, because it provides them with agency and control that wasn't available to prior generations. I think, at the end of the day when you pare it all back, we want people, we want Australians, to have access to the best ideas, the best new options, the most choice, the most agency and the lowest prices. We don't want people to be dependent upon great big institutions like banks. We want people to be able to become the master of their own domain to the greatest extent possible, and that is what I think cryptocurrency and digital assets offer Australians.

There is also a great dividend to the country if we can become a digital asset or a cryptohub, and that is of course more investment and more jobs. I have to say I've been blown away by the number of people who are working in cryptocurrency in Australia already. I'm also concerned about the capital and brain drain that we are facing because of a lack of regulation and a lack of sophistication in this space. The fact is that Australian businesses and Australian capital are going to jurisdictions like the UK, the US and Singapore because they have a better regulatory system. When I talk about a better regulatory system, what I'm talking about is two key principles. The first principle is that we want to protect consumers. We already have a system of significant financial regulation, but cryptocurrency—which, as I say, is owned by one in five Australians—is largely unregulated.

So we want to make sure that we protect consumers, but we also want to make sure that Australia is getting that investment which is going to drive dynamism and drive the options and the choice so that people can get away from the big banks if they want to or can get a lower price on international money transfers to their family in another country. The agency and the choice, I think, are very important here in this space. This report delivers a suite of recommendations on cryptocurrency. We have recommended the creation of a licensing system for crypto markets. We have recommended a licensing system for custody and depository systems. We have recommended a new company structure known as a DAO, or a decentralised autonomous organisation. So we have recommended some significant corporate law changes. We've recommended these changes because we felt that there was a lack of regulation and a lack of certainty which could do a combination of things: it could hurt consumers, but it could also drive down investment in Australian cryptocurrency. We have also decided to make recommendations to improve the tax competitiveness of Australian cryptocurrency. We have recommended changes to the capital gains tax regime so that capital gains tax occurs only if there is a genuinely definable capital gain or loss. It has come to the committee's attention that the way the CGT regime operates could actually be damaging new products and new innovation in Australia because of the tax arrangements. The committee also suggested that companies which are engaged in digital mining should be eligible for a company tax discount if they source renewable energy of their own making. That is, of course, a reflection of the fact that I don't think the Australian people would support burning up the grid and burning up fossil fuels to underpin bitcoin or other cryptocurrency mining.

Also, we do need to significantly increase our investment in renewable energy if we are to decarbonise the electricity grid. We have made great progress in developing solar and wind. Just in the past few weeks, the Senate has considered a bill to facilitate offshore wind. But the ongoing investment into renewable energy will be critical for Australia to realise our net-zero ambitions. We've also made some significant recommendations in relation to a phenomenon known as debanking, and this has been a major issue in the committee's deliberations. Basically, the issue is that people who have been involved in fintech or cryptocurrency have found it very hard to get a bank account, and if you can't get a bank account it's very hard to be in an innovative country, because that is the basis for so many things that you need to be able to do. Some people have been debanked 90 times, and there's been a merry-go-round of small businesses and large businesses which have been debanked just because of the business that they are in, which in many parts is actually a legal business and has been semi-regulated by AUSTRAC under their digital currency exchange regime.

So, in summary, this is an agenda for Australian leadership in cryptocurrency. It would put Australia at the top of the list of countries with a sophisticated regulatory framework—one that can drive those benefits to consumers but also one that can attract investment on shore. But, unless we address the issues of debanking, we face a major brain drain and a major capital drain. The solutions we put forward in the committee's report don't seek to force banks to finance any particular person or any particular company. We wouldn't force a bank to finance a coalmine and we wouldn't force a bank to finance a digital miner. These are liberal solutions in the form of more disclosure but also in terms of forcing the Australian Financial Complaints Authority to have a role here in this space. Finally, I have a couple of points about the process. This has been a process which has garnered huge attention—more than 100 submissions in just this past six months, public hearings and a huge amount of interest from the cryptocurrency community and beyond. These are bipartisan recommendations, so I would like to place on record my thanks to Senator Marielle Smith, who did a terrific job in being deputy chair of this committee over the most part of two years.

I also want to thank the other members of the committee and offer my thanks to Lyn Beverley and CJ Sautelle of the secretariat, who've worked extremely hard with a very difficult chairperson, at times! The product of their work is very, very good. The committee is a good example of the parliament going into places where it perhaps doesn't always go, and I think that there were probably some words put into Hansard which probably haven't be seen before and probably shouldn't be seen again. But I do think that one of the problems we have is that we are a long way away from the market in general, as a parliament—and I use that term in the broadest sense. In this place, in relation to these issues, we are a very, very long way away from the dynamism and the rapid pace of innovation. So we have tried to listen and tried to respond with a plan that would put consumers first, but we've also tried to maximise the opportunities for Australia to capture this innovation, which is irresistible, hugely disruptive and full of opportunities for our country.

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