Feb 04, 2023
Australia Launches Consultation on Crypto Taxonomy
Australia is leading the way in the global race to regulate the cryptocurrency space, with the nation’s treasury department recently releasing a consultation paper outlining a proposed taxonomy of crypto assets. The paper, titled “Token Mapping”, is a foundational step in the government’s multi-stage reform agenda to regulate the market, and seeks to inform a consumer-conscious and innovation-friendly approach to policy development.
The paper proposes four major types of products related to the crypto industry, based on a functional and technology-neutral method. The first level outlines the key concepts of crypto networks, crypto tokens, and smart contracts. A crypto network is a distributed computer system capable of hosting crypto tokens, with the most well-known examples being Bitcoin and Ethereum. A crypto token is defined as a unit of digital information that can be exclusively used or controlled by a person who doesn’t administer the host hardware where the token is recorded. A smart contract is a computer code published to a crypto network’s database, and can involve intermediaries or agents performing functions, or can be completed by crypto networks without either.
The paper proposes its taxonomy of four types of crypto-related products: crypto asset services, intermediated crypto assets, network tokens, and smart contracts. Crypto asset services include lending and borrowing, fiat on/off ramping, crypto token trading, funds management, mining/staking-as-a-service, gambling and custody. Intermediated crypto assets are the closest to a wide-spread definition of tokens, and include rights or licenses in relation to event access or subscriptions, intellectual property, reward programs, consumer goods and services, fiat money, non-financial assets and government bond coupons. Network tokens are a “new type of currency” constituting peer-to-peer payment infrastructure, and smart contracts exist on a spectrum from “intermediated” to “public”.
The paper does not provide any legislative initiatives, but its authors anticipate a relatively easy tailoring of existing laws for a large portion of the crypto ecosystem. The treasury will wait for feedback up until March 3, and the next major step of a national regulatory discussion will come with a release of a similar paper on the possible licensing and custody framework for crypto in mid-2023.
The UK treasury also recently published its consultation paper for the crypto regulation, emphasizing the capacity of the existing Financial Services and Markets Act to cover digital assets.
The introduction of a comprehensive taxonomy for crypto assets is an important step in the development of the industry, and will enable the growth of the web3 space. It will also provide a framework for NFTs to be marketed and sold more effectively. NFTs are a form of digital asset that can be used to promote products and services, and are becoming increasingly popular in the crypto space. A NFT marketing agency can help businesses to create and promote their NFTs, and can provide advice on the best strategies for selling them. Twitter NFT marketing is also becoming increasingly popular, and is a great way to reach a wider audience.
A web3 agency can also provide a range of services related to the crypto space, such as creating and managing crypto wallets, providing advice on crypto trading, and developing and deploying blockchain-based applications. With the introduction of a taxonomy for crypto assets, businesses and individuals will have a better understanding of what constitutes a crypto asset, and will be able to make more informed decisions when trading, investing, and using crypto assets.
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