Australia

AI regulations in global focus as EU approaches regulation deal

Concerns over the potential misuse of AI have prompted the U.S., U.K., China and the G7 to speed up regulation of the technology, but Europe is already ahead.

The surge in generative artificial intelligence (AI) development has prompted governments globally to rush toward regulating the emerging technology. The trend matches the European Union’s efforts to implement the world’s first set of comprehensive rules for AI.

The EU AI Act is recognized as an innovative set of regulations. After several delays, reports indicate that on Dec. 7, negotiators agreed to a set of controls for generative AI tools such as OpenAI’s ChatGPT and Google’s Bard.

Concerns about the potential misuse of the technology have also propelled the United States, the United Kingdom, China and other G7 countries to speed up their work toward regulating AI.

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Australian tax data shows a growing desire to hold crypto for DIY retirement

Australians are increasingly adding cryptocurrency to their “self-managed super funds” as a means to secure their retirement life, according to newly released data.

Australians are increasingly looking to cryptocurrency to secure a peachy retirement, with allocation to the asset class from self-managed retirement funds increasing 400% in just four years — and the growth rate surpassing stocks and bonds. 

As of the quarter ending in September, the nearly 612,000 self-managed super funds (SMSFs) are holding a total of $658.6 million (992 million Australian dollars) worth of cryptocurrencies, show statistics released on Nov.

The latest figure is a 400% increase from the same quarter in 2019, which closed out at just under $131.5 million (198 million AU).

In Australia, self-managed super funds — also known as private superannuation funds — allow individuals to control how their retirement funds are invested.

Crypto tax provider Koinly’s head of tax, Danny Talwar, told Cointelegraph this makes crypto the “largest growing asset class in SMSFs.”

In comparison, listed shares — representing the largest allocation category for SMSFs at the end of the last quarter — grew 28% over the same time.

However, total SMSF allocations to crypto saw a slight 0.8% drop from the quarter ending June 2023 and a 2.4% drop compared to the previous year.

Crypto allocation amounts within all SMSFs per quarter since September 2019.

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Australia tries again to combat ‘future sectors’ crypto scams

The “Proposed Scams Code Framework” consultation paper aims to delegate clear roles and responsibilities to government and private entities when combatting scams.

A consultation paper on a new framework for addressing consumer and business scams proposed by Australia’s Department of the Treasury considers applying sector-specific codes and standards to banking and cryptocurrency scams, among others.

The paper adds to the efforts of the Australian Competition and Consumer Commission (ACCC) to combat scams via the annual Scams Awareness Week initiative.

The “Proposed Scams Code Framework” consultation paper — announced on Nov.

Scams code framework proposed by the Australian Treasury. Source: treasury.gov.au

The framework proposes three broad categories for assigning codes and standards, covering what they see as the areas most targeted by scammers: banks, telecommunications providers and digital communications platforms.

Related: Australian Treasury proposes to regulate crypto exchanges, not tokens

The Treasury highlighted that Australian consumers and businesses lost at least $3.1 billion to scams in 2022 — an 80% increase from 2021.

The new mandatory industry codes will outline the responsibilities of the private sector concerning scam activity.

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Binance Australia Derivatives license canceled by securities regulator

In February, Binance Australia Derivatives abruptly closed certain derivatives positions and accounts, citing investor classification compliance.

The Australian Securities and Investments Commission (ASIC) has canceled the license of Binance Australia Derivatives after a targeted review of Binance’s operations in the country.

“ASIC has today canceled the Australian financial services license held by Oztures Trading Pty Ltd trading as Binance Australia Derivatives,” the securities regulator stated in the official announcement on April 6.

Following the license cancellation, Binance Australia Derivatives clients will not be able to increase derivatives positions or open new positions with the platform from April 14. The company will also require users to close any existing derivatives positions before April 21, as Binance is expected to close any remaining open positions on that day.

“The terms of the cancellation include a provision that the cancellation has no effect on the requirement for Binance to continue as a member of the Australian Financial Complaints Authority until the end of April 8, 2024,” the statement said.

The Australian securities regulator went on to say that it has been conducting a targeted review of Binance’s financial services business in Australia, including its classification of retail and wholesale clients. According to ASIC chair Joe Longo, the review was related to compliance with the classification of retail and wholesale clients. The official said:

“Retail clients trading in crypto derivatives are afforded important rights and consumer protections under financial services laws in Australia, including access to external dispute resolution through the Australian Financial Complaints Authority.”

In the statement, ASIC mentioned that the global Binance exchange and its CEO, Changpeng “CZ” Zhao, are currently facing a lawsuit from the United States Commodity Futures Trading Commission. The regulator also noted that various Binance group entities had been subject to other regulatory warnings and action worldwide, referring to a series of warnings and investigations initiated by global regulators against Binance in 2021.

Related: Australian ‘Big Four’ bank ANZ halts cash withdrawals from many branches

Following its recent engagement with ASIC, Binance has chosen to pursue a “more focused approach” in Australia by closing down Binance Australia Derivatives, a spokesperson for Binance told Cointelegraph. The representative emphasized that spot trading on Binance will still be available for Australian residents, stating:

“Australians can continue to enjoy the use of our spot exchange product. There are a small number of remaining users on Binance Australia Derivatives, approximately 100, and we have reached out to notify them of the winding down process.”

The news comes after Binance Australia Derivatives sent abrupt notifications to its users in late February, saying it was starting to close certain derivatives positions and accounts. The firm cited investor classification compliance, reportedly claiming that it was restricting users that didn’t meet the requirements to be wholesale investors. Local regulators subsequently launched an investigation, aiming to conduct a “targeted review” of Binance’s local derivatives operations.

Magazine: Asia Express: US and China try to crush Binance, SBF’s $40M bribe claim

Hong Kong fund plans to raise $100 million for crypto investment

The new Hong Kong-based equity fund will focus on the regional market and embrace Web3 startups.

As Hong Kong is again opening up to the crypto market, local investors are launching a $100 million fund to finance the digital industry. The new fund, ProDigital Future, will aim at early-stage Web3 companies oriented at the regional market. 

According to a Bloomberg report from March 30, ProDigital Future has finished its half-year fundraising period with about $30 million in its pockets. However, it plans to raise $100 million by the end of 2023.

The fund is led by Ben Ng, a partner at Hong Kong-based equity firm SAIF Partners, and Curt Shi, a long-time tech investor from China. At this point, Sunwah Kingsway Capital Holdings and Golin International Group have already hopped in to support the fund.

So far, Shi told journalists that the fundraising process has been “relatively smooth,” although the investors are cautious about putting their money into crypto projects. Reportedly, Hong Kong investors and some family offices from China, Australia and Singapore also participated in ProDigital Future.

The fund will “embrace Hong Kong and its policies” but intends to be present in Australia and Singapore, “as well as in Europe and the United States.”

ProDigital Future has already invested in six digital-asset projects with metaverse company GigaSpace and One Future Football, a digital football league from Australia currently operating in stealth mode.

Related: OKX plans Australian expansion, citing ‘huge appetite’ for crypto

In October 2022, the government of Hong Kong floated the idea of introducing its own bill to regulate crypto. On Feb. 20, Hong Kong’s Securities and Futures Commission released a proposal for a licensing regime for cryptocurrency exchanges, set to take effect in June.

The regime suggests a necessary licensing procedure, demanding that potential market players meet several prerequisites, including the safe custody of assets, Know Your Customer, Anti-Money Laundering and Combating the Financing of Terrorism regulations.

Australian senator introduces private bill to expedite crypto regulation

Senator Andrew Bragg has introduced a bill proposing regulatory standards for the cryptocurrency industry in Australia.

A new bill has been introduced to the Australian Parliament proposing regulations for providing cryptocurrency services in the country.

Senator Andrew Bragg submitted a private senators’ bill titled Digital Assets (Market Regulation) Bill 2023 to “protect consumers and promote investors,” which includes regulatory recommendations for stablecoins, licensing of exchanges and custody requirements.

Proposed regulatory changes are typically introduced by Australian ministers. However, as the Parliamentary Education Office stipulates, members of parliament can introduce private members’ or private senators’ bills, which can take months or years to pass through parliament.

Bragg provided further information for the submission of the private bill, hitting out at the current Labor government for not following through on 12 recommendations relating to cryptocurrency regulation introduced by the Senate Select Committee on Australia as a Technology and Financial Centre in October 2021.

The senator also added that Australian consumers had been left exposed to industry-wide events like the collapse of FTX by the inaction of the Australian government to provide regulatory clarity to the sector.

“Australia can be a digital asset hub whilst protecting digital asset consumers. But we must act now.”

The act aims to provide a regulatory framework for cryptocurrency exchanges, custody services and stablecoin issuers, which both protects consumers and promotes investment.

It also looks to provide guidelines for reporting information by authorized deposit-taking institutions for the issuance and control of a central bank digital currency.

Related: Australia introduces classification for crypto assets

If passed, the bill would require a person or business to hold a license granted by the Australian Securities and Investments Commission or a foreign license to operate a cryptocurrency exchange. This would also apply to cryptocurrency custody services and stablecoin issuers in Australia.

The bill also sets out various obligations and requirements for exchanges, custody services and stablecoin issuers. These range from capital or minimum reserve requirements, segregation of customer funds, reporting on customer holdings, auditing, assurance and disclosure arrangements.

Public consultation is currently ongoing in Australia over the classification of cryptocurrencies and various digital asset tokens, services and platforms. The “token mapping” consultation paper was released in February, outlining basic definitions for the cryptocurrency sector.

Magazine: Best and worst countries for crypto taxes — plus crypto tax tips

SVB contagion: Australia reportedly asks banks to report on crypto

Australia’s prudential regulator has reportedly told banks to improve reporting on crypto assets and provide daily updates.

Australia’s prudential regulator has reportedly asked local banks to report on cryptocurrency transactions amid the ongoing contagion of Silicon Valley Bank’s (SVB) collapse.

The Australian Prudential Regulation Authority (APRA) has started requesting banks to declare their exposures to startups and crypto-related companies, the Australian Financial Review reported on March 21.

The regulator has ordered banks to improve their reporting on crypto assets and provide daily updates to the APRA, the report notes, citing three people familiar with the matter. The agency is aiming to obtain more information and insight into banking exposures into crypto as well as associated risks, the sources said.

The new measures are reportedly part of the APRA’s increased supervision of the banking sector in the aftermath of recent massive collapses in the global banking system. On March 19, UBS Group agreed to buy its ailing competitor Credit Suisse for $3.2 billion after the latter collapsed over the weekend. The takeover became one of the latest failures in the banking industry following the collapses of SVB and Silvergate.

Barrenjoey analyst Jonathan Mott reportedly told clients in a note that the situation “remains stable” for Australian banks but warned confidence could be quickly disrupted, putting pressure on bank margins.

Related: Silvergate, SBV collapse ‘definitely good’ for Bitcoin, Trezor exec says

“Our channel checks indicate deposits are not being withdrawn from smaller institutions in any size, and capital and liquidity buffers are strong,” Mott said, adding:

“But this is a crisis of confidence and credit spreads and cost of capital will continue to rise. At a minimum, this will add to the margin pressure the banks are facing, while credit quality will continue to deteriorate.”

The news comes soon after the Australian Banking Association launched a cost of living inquiry to study the impact of the COVID-19 pandemic and geopolitical tensions on Australians. The inquiry followed an analysis of the rising inflation suggesting that more than 186 banks in the United States are at risk of a similar shutdown if depositors decide to withdraw all funds.

SVB contagion: Australia purportedly asks banks to report on crypto

Australia’s prudential regulator has purportedly told banks to improve reporting on crypto assets and provide daily updates.

Australia’s prudential regulator has purportedly asked local banks to report on cryptocurrency transactions amid the ongoing contagion of Silicon Valley Bank’s (SVB) collapse.

The Australian Prudential Regulation Authority (APRA) has started requesting banks to declare their exposures to startups and crypto-related companies, the Australian Financial Review reported on March 21.

The regulator has ordered banks to improve their reporting on crypto assets and provide daily updates to the APRA, the Financial Review notes, citing three people familiar with the matter. The agency is aiming to obtain more information and insight into banking exposures into crypto as well as associated risks, the sources said.

The new measures are apparently part of the APRA’s increased supervision of the banking sector in the aftermath of recent massive collapses in the global banking system. On March 19, UBS Group agreed to buy its ailing competitor Credit Suisse for $3.2 billion after the latter collapsed over the weekend. The takeover became one of the latest failures in the banking industry following the collapses of SVB and Silvergate.

Barrenjoey analyst Jonathan Mott reportedly told clients in a note that the situation “remains stable” for Australian banks but warned confidence could be quickly disrupted, putting pressure on bank margins.

Related: Silvergate, SBV collapse ‘definitely good’ for Bitcoin, Trezor exec says

“Our channel checks indicate deposits are not being withdrawn from smaller institutions in any size, and capital and liquidity buffers are strong,” Mott said, adding:

“But this is a crisis of confidence and credit spreads and cost of capital will continue to rise. At a minimum, this will add to the margin pressure the banks are facing, while credit quality will continue to deteriorate.”

The news comes soon after the Australian Banking Association launched a cost of living inquiry to study the impact of the COVID-19 pandemic and geopolitical tensions on Australians. The inquiry followed an analysis of the rising inflation suggesting that more than 186 banks in the United States are at risk of a similar shutdown if depositors decide to withdraw all funds.

Mastercard to settle transactions for stablecoin wallet in APAC

Mastercard has entered a collaboration that would allow retail customers in the APAC region to spend their stablecoins anywhere Mastercard is accepted.

Global payment provider Mastercard is launching a stablecoin digital wallet integration with the Australian stablecoin platform Stables.

Mastercard and Stables on March 20 announced a collaboration to allow retail customers in the Asia-Pacific (APAC) region to spend their stablecoins anywhere Mastercard is accepted.

The collaboration involves a stablecoin-only wallet built by Stables, coming with a payment card supported by Mastercard. The payment card enables users to save and spend the USD Coin (USDC) stablecoin by converting the digital currency into fiat and settling on Mastercard’s network. The card will be accessible through the Stables digital application via mobile wallets.

Source: Stables

According to Mastercard Australasia’s head of fintech, Kallan Hogan, the company’s collaboration with Stables is a significant development in terms of Web3 adoption.

“Mastercard is committed to powering innovative payment solutions that give cardholders the freedom to spend their assets where, how, and when they want,” Hogan said, adding:

“Stables is building a solution for the Web3 sector leveraging Mastercard’s global network and cyber and intelligence tools, including CipherTrace and Ekata, with trust and security at the core.”

The Mastercard-enabled wallet integration will become available for users in the second quarter of 2023, Stables co-founder and chief operating officer Daniel Li told Cointelegraph. The stablecoin digital Mastercard will be initially available for users based in Australia and is then planned to enter Europe, the United States, the United Kingdom and most of Asia Pacific.

The payment solution deploys Stables’ proprietary settlement engine that processes all payments using USDC and works directly with Mastercard to enable settlement, Li stated. At the same time, the wallet will accept deposits in a number of stablecoins, including rival stablecoin Tether (USDT) and Binance USD (BUSD), but all the deposits will be automatically converted into USDC at no cost.

Related: Circle taps Cross River as banking partner, expands ties with BNY Mellon

According to Li, Stables is confident in USDC’s future despite the recent issues involving the collapse of Silvergate Bank. The COO stated:

“Stablecoins will play a pivotal role in the new financial system and will be core to bridging the worlds of traditional and decentralized finance. Stables will continue to work with USDC and Circle as a pivotal part of that ecosystem.”

In addition to crypto, users can also top up their balances using bank transfers, direct debit and other modes of payment, Li said. At launch, Stables supports deposits and withdrawals in the Australian dollar, with soon-to-come integrations including the U.S. dollar, euro, the British pound, as well as currencies frothe APAC, Latin America and Africa.

Update March 21, 7:00 UTC: the article has been updated  to reflect that Daniel Li is chief operating officer (not CEO) at Stables.

Australian Banking Association’s cost of living inquiry reveals bank pressure

An analysis of the rising inflation and concurrent collapse of Silicon Valley Bank proved that more than 186 banks in the U.S. are at risk of a similar shutdown if depositors decide to withdraw all funds.

The trade association for the Australian banking industry — the Australian Banking Association (ABA) — launched a cost of living inquiry to closely study the impact of the COVID-19 pandemic, global supply chain constraints, geopolitical tensions and more on Australians.

An analysis of the rising inflation and concurrent collapse of three major traditional banks — Silicon Valley Bank (SVB), Silvergate Bank and Signature Bank — recently proved that more than 186 banks in the U.S. are at risk of a similar shutdown if depositors decide to withdraw all funds. The ABA’s inquiry aims to identify ways to ease the cost of living in Australia and the Government’s fiscal policy response.

Consumer price index, percentage change from corresponding quarter in previous year, December 2012 – December 2022. Source: ausbanking.org.au

ABA acknowledged that many Australians would struggle to adjust to a higher cost of living, while it may be easier for some, adding that:

“The ABA notes most customers will manage the higher cost of living and their mortgage commitments by changing their spending patterns, applying their accumulated savings to their higher repayments in anticipation of higher borrowing rates, or refinancing their mortgage.”

One of the most significant pressures for banks was when citizens rolled over from a fixed-rate mortgage to a variable rate. However, ABA urged customers to be proactive and ensure they are getting the best deal for their banking services.

Household savings ratio, December 2014 to December 2022. Source: ausbanking.org.au

Property rent across Australia has also witnessed a steady increase as markets normalized following the end of COVID-19 restrictions. Citizens experiencing financial difficulty can contact their banks and get help, including fees and charges waivers, emergency credit limit increases and deferral of scheduled loan repayments, to name a few.

Related: National Australia Bank makes first-ever cross-border stablecoin transaction

Alongside this attempt to cushion Australians against rising fiat inflation, the Reserve Bank of Australia and the Department of the Treasury have been holding private meetings with executives from Coinbase, with discussions revolving around the future of crypto regulation in Australia.

Cointelegraph confirmed from an RBA spokesperson that Coinbase met with the RBA’s payments policy and financial stability departments in mid-March “as part of the Bank’s ongoing liaison with industry.”