Crypto Update
/Crypto regulation bill up for discussion
A draft bill has been released by the government regarding the introduction of licences for digital asset exchanges, custody services and stablecoin issuers, and implements disclosure requirements for Chinese state-owned banks that facilitate e-Yuan in Australia.
The draft bill sets out requirements of digital exchanges that include minimum capital and participant conduct. The full face value amount of liabilities for stablecoins issued must be held in reserve in APRA-regulated financial institutions. The proposed bill also stipulates that digital asset custody remain in Australia.
Ethereum upgrades to proof-of-stake, earth breathes a sigh of relief
Ethereum has finally upgraded to a proof-of-stake mechanism which has removed the energy consumption of mining by 99.95 per cent. The change was created by merging Ethereum’s existing execution layer with the new proof-of-stake consensus layer, known as the Beacon Chain. This merge removes the need for energy-intensive mining to take place, and now block production is performed by the validators operating on the Beacon Chain.
The upgraded blockchain will be just as secure, scalable and decentralised, without the extreme amounts of energy, which is also a saving in the costs of mining. Pre-merge it cost around 13,000 Ethereum (AU$30 million) each and every day to secure the network. Mining is only done by motivated miners, who must be paid, or the system ceases to function - the AU$30 million is the cost of the miners. New Ether required to pay to secure the network will drop 90 per cent.
Evertas Inc. launches crypto insurance in Australia
Evertas Inc. is moving into Australia and Hong Kong to insure cryptoassets for institutional holders of cryptoassets and blockchain technology. Most cryptoassets are not insured. Evertas writes policies that protect owners against theft or loss with Lloyd’s of London as its coverholder - the only cryptoasset insurer with such a status, granting it the ability to offer rated, licensed insurance policies with the backing of the reinsurance and insurance market.
Evertas offers crime and species policies, with species policies being those covering tangible, high-value items, in a single underwriting. ‘Slashing’ of policies can also be used, which protects the contents of custodial wallets against loss in the case of a technological failure.
APRA outlines updates to regulatory framework
The Australian Prudential Regulation Authority (APRA) is undertaking a project to make the regulatory framework for crypto clearer, simpler and more adaptable. The program has already begun and is designed to enhance financial safety and stability in a very quickly changing environment. Initiatives include better regulation and small changes as the program progresses in terms of the framework, use of digital technology, and strategic approaches to risks. APRA wants to enhance the current requirements, as opposed to trying to make entirely new standards.
APRA will be consulting with regulated entities, industry associations and other key stakeholders using workshops and surveys to gather information and improve.
Government ‘token mapping’ project announced
The government has made a statement regarding a new project starting this year to improve the way Australia’s regulatory system manages cryptoassets, called ‘token mapping’. Token mapping will gather information on all the digital tokens available in Australia, a project the government says is a world-first. The goal is ultimately to ensure consumers are protected and informed, but that we don’t miss out on innovations in technology by taking a conservative approach.
The token mapping project will identify gaps in regulation, progress the licensing system, review innovative organisational structures, examine custody requirements for third-party organisations handling cryptoassets and offer consumer protections. A consultation paper is to be released soon.
