Albanian Government Launches Crypto Token Mapping Exercise

The Australian government has announced that it will prioritize “token mapping” as part of its review of crypto-assets. Treasurer Jim Chalmers and Deputy Minister for Competition, Charities and Treasury Andrew Leigh argued that “Regulations are struggling to keep pace and adapt to the crypto-asset industry.”

The government believes that no other country has conducted a symbolic mapping exercise. It will focus on better understanding how Australians use crypto-assets and gaps in current regulatory frameworks. A central theme of the government statement is consumer protection and the need to “provide additional safeguards to consumers”.

Token mapping was a key recommendation from a October 2021 review by a parliamentary select committee in Australia as a technology and financial hub. The committee’s reasoning focused heavily on the rise of decentralized finance (DeFi) and, in particular, the growth of DeFi protocols and blockchain projects using decentralized autonomous organization (DAO) models. DAOs present governance models that allow stakeholders to vote, make decisions collectively rather than through a centralized entity or designated person. For example, some DAOs are used to launch crypto stablecoins.

A “serious approach” to crypto regulation

The Morrison government, which left office in May 2022, had announced a consultation on a Digital Services Bill. Built around four pillars which included technological neutrality, flexible principles, direct ministerial oversight and cooperation, the plan included a framework for DAOs. However, the Albanian government will put these plans on hold while it conducts the token mapping work: “The previous government dabbled in crypto-asset regulation but prematurely jumped straight to options without first understanding what was regulated.”

Nonetheless, Australian policymakers recognize the potential benefits of early action. Noting that examples of DAO legal structures around the world are ‘limited’, the House Committee pointed out that the US state of Wyoming has legislated in this area and has attracted ‘significant business activity’ due to its ‘proactive stance’. .

The race to establish frameworks and manage arbitration

Regulators in other major regional economies are still grappling with regulatory arbitrage related to the crypto-asset space. In July 2022, South Korean regulators stepped in to fight so-called « premium kimchi dealers.” These dealers buy tokens, including bitcoins, from overseas before reselling them for a profit through domestic crypto exchanges. In August, the country’s Financial Intelligence Unit (FIU) took action against 16 companies based abroad he believes he conducted activities without the proper authorizations under the Financial Transactions Reporting Act.

Meanwhile, Hong Kong is preparing to launch its Virtual Asset Service Provider (VASP) licensing regime, which its government says will be one of the most comprehensive in the world. License applications for covered businesses must be submitted by December 1, 2023.

Next steps

The Australian government’s announcement represents the first step in a likely years-long process to legislate to provide a comprehensive regulatory framework. In the meantime, companies should keep abreast of the latest announcements and in particular, monitor the public consultation document on token mapping. The government has pledged to publish it “soon”.

Originally posted August 26, 2022, updated August 26, 2022