Blockchain and crypto are technologies performing the same functions as existing financial infrastructure, so they shouldn’t be treated as separate asset classes when crafting legislation, according to the fintech chief of Australia’s securities regulator.
In a paper presented at the Melbourne Money & Finance Conference on Wednesday, Australian Securities and Investments Commission’s (ASIC’s) head of fintech, Rhys Bollen, said crypto should be regulated on “economic substance rather than technological form.”
Tokenized securities should fall within securities laws, and stablecoins should trigger payment services legislation, Bollen said, while noting that other elements of crypto may be subject to consumer protection laws.
Bollen’s approach contrasts with crypto-specific regulatory frameworks in other countries, such as the CLARITY Act in the US and the Markets in Crypto-Assets Regulation framework in Europe.
Bollen argued that the three main financial functions — capital allocation, payments and risk management — have evolved with technological advancements and that distributed ledger technologies, such as blockchain, shouldn’t be treated differently:
“Digital assets largely represent new technological instances of longstanding financial activities. While the mechanisms of issuance, transfer and record-keeping have changed, the underlying economic functions served by these instruments have not.”
“Regulatory systems have repeatedly adapted to technological change – from paper instruments to electronic records – without abandoning foundational principles such as consumer protection, market integrity and systemic stability,” Bollen added.
Australia isn’t crafting one big crypto bill
Australia is already starting to adopt this approach, with the main piece of crypto legislation, the Digital Asset Framework bill, seeking to merely amend parts of the Corporations Act, Bollen said.
“The Bill does not abandon the existing financial services framework. Instead, it introduces tailored amendments that integrate digital asset platforms into the established regulatory architecture.”
The Australian crypto market has also been given guidance through ASIC Information Sheet 225, which states that existing definitions of “financial product” and “financial service” under the Corporations Act can apply to digital assets.
“ASIC’s guidance explicitly rejects the notion that digital assets constitute a discrete asset class for regulatory purposes,” Bollen said. “Instead, it confirms that a digital asset may fall within the regulatory perimeter where it functions as a security, derivative, managed investment scheme interest or non-cash payment facility.”
Bollen said a focus on “economic characteristics rather than technological labels” would enable regulators to provide clearer rules to market participants while reducing “opportunities for regulatory arbitrage.”
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ASIC Information Sheet 225 is also focused on the regulation of intermediaries rather than tokens, with Bollen noting that most consumer harm in the digital asset industry has stemmed from the conduct of crypto platforms offering custody, trading, lending or yield services.
Decentralized offerings still tricky to regulate
Bollen acknowledged that classification issues may arise with decentralized products or services, though he said legal analysis should focus on practical control and benefit, rather than formal claims of decentralization:
“Where identifiable parties exercise influence over protocol design, governance, or economic outcomes, regulatory obligations can and should attach.”
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