ASIC head of digital assets Reece Bolen has likened cryptocurrencies to prison cigarettes, raising concerns in the Australian industry that ASIC is planning an overly broad regulatory approach. Industry observers fear ASIC's approach could further stifle innovation in Australia's cryptocurrency industry and encourage overseas companies to seek a friendlier regulatory regime.
Have you heard the news? Cryptocurrency is like cigarettes…like prison cigarettes.
Yes, that's right. Rhys Bolen, head of digital assets at the Australian Securities and Investments Commission (ASIC), said Bitcoin (also known as digital gold, the future of money, etc.) and other cryptocurrencies are being used in prisons for cigarettes (also known as Darb, etc.). They say it may share many similarities with the dury, nail, and cigarillo. ).
Mr Boren made the unlikely comparison on Wednesday during a liaison meeting with members of Australia's digital asset industry. The purpose of the meeting was to discuss feedback on ASIC's controversial new consultation document, INFO-225, published earlier this month.
Mr. Bolen was asked about an example paper describing the application of the Non-Cash Payment (NCP) Facility Act to digital assets. Although this example relates to stablecoins, it is ambiguous enough to apply equally to all cryptocurrencies. In his response, Boren acknowledged the complexity of the situation, but unexpectedly likened cryptocurrencies to good old-fashioned gun sticks.
Related: New AUSTRAC taskforce to combat use of crypto ATMs in money laundering
Milk it? Is Bitcoin like a prison?
The INFO-225 consultation document will ultimately form the basis of updated guidance for Australia's digital asset industry. It includes 13 examples of how the law applies to cryptocurrencies. It was one of these instances that caused a huge uproar. (You have the right to speak until February 28, 2025).
In response to a request for clarification on the NCP example from the consultation document, Mr Bollen explained:
In theory, almost anything could be used to pay someone else. As you know, cigarettes are used in prisons as a means of payment…if a product advertises this as one of its main uses and you see it in its marketing…that's why we This means we are moving closer to the realm of financial products. There is no particular bright line test.
Rhys Bollen, ASIC Digital Assets Lead
This is an interesting reaction. It occurs to me that I don't recall either Bitcoin or any tobacco company's marketing teams promoting either as a primary payment method. (In fact, there is evidence that the prison economy is based on ramen noodles.)
His point was simply that almost anything could be covered under the NCP Act as it could be used as a medium of exchange, even if it was poorly worded. Understandably, this overly broad definition of what can be captured under the NCP Act has concerned Australia's cryptocurrency industry, with many fearing it will stifle innovation.
This could have regulatory implications for many parts of the digital asset ecosystem, including non-custodial wallets, Michaela Juric, general manager of programs and partnerships at Australian stablecoin project AUDD, told Decrypt. said.
I think this view sets a pretty dangerous precedent. For example, MetaMask is a non-custodial wallet product. This is just software that allows users to sign transactions. If one of MetaMask's primary functions is to enable users to send and receive payments, this interpretation by ASIC could mean that MetaMask would need to obtain an AFSL to serve Australian users. there is.
Michaela Juric, General Manager of AUDD Programs and Partnerships
Australia promotes stronger virtual currency regulations
The latest guidance Bollen was discussing is part of Australia's efforts to strengthen regulation of the crypto industry, with ASIC and Australia's financial crime watchdog AUSTRAC recently stepping up their focus on the industry to crack down on illegal activity. are.
Earlier this year, ASIC announced that virtually all crypto-related businesses in Australia will be required to obtain a financial services license. The regulator also recently updated Regulatory Guide 133 for the first time in over two years, adding new requirements for crypto asset custody providers.
Related: ASIC announces all crypto startups will need to obtain a financial services license
Australia's financial crime watchdog AUSTRAC has also announced the creation of a new Cryptocurrency Task Force, saying it will focus on policing the cryptocurrency industry over the next 12 months. The organization has already begun cracking down on cryptocurrencies with a campaign to eradicate their use. Virtual currency ATM in money laundering.
