Feb 04, 2023

Australia Launches Crypto Taxonomy Consultation

The Australian Treasury recently released a consultation paper on “token mapping” as part of its multi-stage reform agenda to regulate the crypto industry. The paper proposes a functional and technology-neutral method to distinguish four major types of crypto-related products.

The paper first 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, and the two most well-known public crypto networks are Bitcoin and Ethereum. A crypto token is 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 computer code published to a crypto network’s database.

The paper then 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, nonfinancial assets and government bond coupons. Network tokens constitute peer-to-peer payment infrastructure and are a “new type of currency”. Smart contracts exist on a spectrum from “intermediated” to “public”.

The Treasury will accept feedback up until March 3 and hopes to tailor existing laws to cover a large portion of the crypto ecosystem. It will release a similar paper on the possible licensing and custody framework for crypto in mid-2023.

The UK Treasury also recently published a consultation paper for the crypto regulation and emphasized the capacity of the existing Financial Services and Markets Act to cover digital assets.

The new regulations proposed by the Australian Treasury are an important step forward in the global race to regulate the crypto industry. They provide a framework for businesses to create innovative products, services and marketing strategies for NFTs, crypto and web3. For example, a NFT marketing agency could use the proposed regulations to create a comprehensive NFT marketing strategy for businesses to promote and sell their NFTs. This could include Twitter NFT marketing and other social media campaigns, as well as NFT promotion and advertising. It could also involve creating a web3 agency to help businesses create and manage their own web3 projects.

The proposed regulations will also help businesses to understand the legal landscape when it comes to crypto, and ensure that they are compliant with the law when it comes to selling NFTs and other crypto products. This will help to create a safe and secure environment for businesses to operate in and will help to protect investors and consumers.

Overall, the proposed regulations are a positive step forward for the crypto industry and will help to create a more secure and transparent environment for businesses to operate in.

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