Feb 04, 2023

Australia Proposes Taxonomy for Crypto Assets

Australia is taking a major step towards regulating the crypto space with the release of a consultation paper on “token mapping”. The paper proposes a “functional” and technology-neutral method of distinguishing four major types of crypto-related products.

The paper outlines the key concepts of crypto networks, crypto tokens, and smart contracts. A crypto network is defined as a distributed computer system capable of hosting crypto tokens. It is used to store information and process user instructions. Examples of public crypto networks include Bitcoin and Ethereum.

A crypto token is a unit of digital information that can be exclusively used or controlled by someone other than the host hardware where the token is stored. Smart contracts are computer codes published to a crypto network’s database which involve intermediaries or agents performing functions under promises or other arrangements or procedures being completed by crypto networks without promises, intermediaries and agents.

The paper proposes 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; they 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 are a “new type of currency” constituting peer-to-peer payment infrastructure, such as Bitcoin. Smart contracts exist on a spectrum from “intermediated” to “public”.

The paper anticipates that existing laws will be able to cover a large portion of the crypto ecosystem. However, it notes that a new legislative framework may be necessary for pockets of the ecosystem that use public, self-service software. The Treasury is inviting feedback on the paper until March 3. Following this, a similar paper on the possible licensing and custody framework for crypto is expected to be released in mid-2023.

The UK Treasury also recently released its own consultation paper for the crypto regulation. It emphasized the capacity of the existing Financial Services and Markets Act to cover digital assets, suggesting that separate legislation may not be necessary.

The Australian and UK governments’ moves to regulate the crypto space come as the financial industry is witnessing a surge in the use of Non-Fungible Tokens (NFTs). NFTs are unique digital assets that are being used in a variety of ways, from selling digital art to promoting products and services. The potential of NFTs has been further highlighted by the growing number of celebrities who have started selling their own NFTs on platforms such as Twitter.

With the rise in NFTs, there has also been an increase in the demand for NFT marketing services. NFT marketing agencies are helping brands and individuals to promote their NFTs and maximize their reach. They are also providing services such as content creation, SEO, and social media marketing to help brands and individuals to promote and sell their NFTs.

The increasing demand for NFT marketing services has also led to the emergence of web3 agencies. These agencies are specialized in providing marketing services for the web3 space, including NFTs. They are helping brands and individuals to create effective NFT marketing strategies, develop engaging content, and promote their NFTs on social media platforms such as Twitter.

The increasing demand for NFTs and NFT marketing services has made it clear that the crypto space is here to stay. With the Australian and UK governments taking steps to regulate the space, it is likely that more countries will follow suit in the near future. This could open up new opportunities for brands and individuals to enter the crypto space and benefit from the potential of NFTs.

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