Simon Kennedy (Cook, Liberal Party) Share this | Hansard source

Digital assets, blockchain infrastructure and tokenisation are taking over global financial markets. They're reshaping payments, custody, capital raising, trading and clearing; they will all be done by what is essentially smart money—tokenised money that is decentralised. This sector is growing, and blockchain is going to revolutionise the entire sector. The question is not whether it will grow. The questions are: Will Australia continue to be a place where financial markets are served through Asia? Will we build jobs or will we lose jobs? Will we build capability and sovereign expertise, or will we continue to watch innovation and investment move offshore?

That's why the Corporations Amendment (Digital Assets Framework) Bill 2025 is a welcome step. It provides legal clarity where uncertainty has long hindered development and frustrated industry. It also highlights something else: just how long this reform has taken and how much ground Australia has lost in what is a race. It is a global race, and Australia is slipping behind.

But, before we get to that, let's focus on what this bill gets right. This bill does something that the Australian digital asset sector has needed for a long time and is long overdue. It brings some clarity. Activity in this space has sat in a grey area not properly regulated and enforced by ASIC through enforcement actions and creating laws, testing them by suing companies in courts, rather than administering laws. Now we have some legal frameworks that can be applied and that business can conform to. The bill finally draws clear lines in the Corporations Act about what a digital token is, when a token constitutes a financial product and when platforms holding these tokens form part of Australia's regulated financial system. This matters because uncertainty is not neutral. Uncertainty deters investment. It drives jobs offshore, it drives capital offshore and we have seen that happen already.

Now, no-one is pretending heavy handed regulation helps industry or innovation. But we needed confidence—confidence so people could invest in this sector. More importantly, we do not need to treat these platforms as outsiders; we need to welcome them as part of the financial regulation system. Instead of forcing digital asset businesses into parallel regulatory universes or into grey areas, this bill allows them, where appropriate, to be recognised with the same regulatory architecture, the same regulatory certainty, that other corporations and banks are subject to. This integration matters for confidence, interoperability, system stability, and jobs and investment for Australia.

The bill also improves transparency for everyday Australians. We now will have clearer disclosure. We'll have clearer expectations of how rights are attached to underlying assets and are protecting Australian consumers who operate in the blockchain or crypto sectors. So, while this bill is not perfect, it is very sensible.

But we can't assess this bill in isolation. We must be honest about the policy context that led us here. The road map for this reform originated with the coalition. Recognising the rapid pace of change in the last government, the coalition commissioned a Senate inquiry into Australia as a technology and financial centre chaired by Senator Andrew Bragg. We developed a comprehensive payment and crypto assets reform agenda which was timely and critical. It recognised digital assets are not simply about speculation and trading. It's not just about people buying crypto and hoping it will go up; it's about payments, market settlement, currency and the very rails the financial system itself operates on. The hard policy thinking has been done over the last six years. The coalition does not support prolonged delay, regulatory drift or enforcement ahead of this legislation. ASIC must now pause, wait for this legislation and work with industry.

This delay has mattered. Instead of having clear rules set by parliament six years ago or three years ago, when the Albanese government came in, Australia has seen regulatory uncertainty and enforcement approaches fill this vacuum. ASIC, in the absence of this legislation, has been forced into a quasi-legislative role, suing companies, taking them to court and destroying business models to try and create test cases to see how the law should apply. This bill addresses some of that, but unfortunately it's too little too late. Digital assets, blockchain and tokenisation are part of the global financial system, but let there be no doubt about this: it is a race, and it's a race that Australia is losing. Comparable jurisdictions including the United Kingdom, the EU and the US have moved quickly and decisively. By the end of 2024, more than 12 months ago, two thirds of comparable jurisdictions worldwide had already regulated stablecoins or crypto assets or had firm plans to do it imminently.

Australia has not kept pace. We are losing investment, we are losing jobs, and we are falling behind as a major financial player on world markets. Countries that provide this regulatory clarity, proportionate rules and certainty attract investment, jobs and technology. The innovation that this sector drives will drive productivity, something we are desperately in search of in this country. Productivity drives wages. It helps make Australians richer. Right now, Australians feel poorer every day because of declining productivity. This is one of the answers, and the government has sat on it for over three years. The case the coalition has made and continues to make is that delay is costly and we must act.

According to KPMG's Pulse of fintech report, in the first half of 2025 Australia recorded just $142 million in fintech investment across 32 deals. That's an 84 per cent fall in deal value and a 42 per cent in deal volume compared to the previous half year. KPMG attributes this to a slowly growing domestic economy and an increasingly cautious investor sentiment. In a sector as mobile as fintech and digital assets, this matters. Capital doesn't wait for certainty. It doesn't wait for the House of Reps or the Senate to pass laws. It moves, and it has moved. We're seeing 84 per cent of capital falling away in this sector.

Also, this bill does not address the widespread practice of debanking, where banks will not bank these fintech, crypto or blockchain players or, in some instances, their customers. Despite the many issue papers acknowledging this as a serious issue and despite government supported regulations by the Council of Financial Regulators, this remains unaddressed. It doesn't provide a clear pathway for Australia to lead in tokenisation. The next generation of financial infrastructure is tokenisation. The EU and the UK are moving there rapidly. The United States actively partners on token markets with major global exchanges, and they are now announcing moves to bring equities on chain. That would be the equivalent of the ASX. This bill lays a foundation but does not yet constitute a strategy, and it's not building on top of it.

It also doesn't address the fact that broker model platforms should not be regulated as financial markets. Broker model digital-asset platforms do not operate multiparty trading venues like traditional financial markets. Applying market license concepts to broker models is disproportionate and unworkable, particularly for platforms accessing global liquidity. Regulatory uncertainty in this area is forcing Australian platforms into isolated, Australia-only liquidity pools, harming consumers and harming competition. Australian consumers are getting a raw deal. We need clear differentiations of business models to avoid unintended consequences.

Stablecoin listing rules place issuer risk onto platforms. Australian platforms face significant compliance and uncertainty when listing stablecoins issued by offshore entities, not licensed locally. Platforms do not control the issuance, the reserves, the governance or redemption mechanics, yet they bear the regulatory risk by listing the asset. Without clearer rules or workable relief, platforms may be forced to delist globally used stablecoins, undermining payments and tokenised use cases for Australian consumers and Australian businesses. Regulatory responsibility should sit exclusively with issuers and not be indirectly imposed through regulatory exchanges.

Lastly, group licensing flexibility is still missing. Digital assets and businesses often operate through integrated corporate groups for legitimate government and risk reasons, no different to any other corporate on the ASX. The framework should allow for corporate authorised representatives within related bodies corporate, reducing duplication of licences and compliance systems. Consumer protection would not be weakened. The accountability would remain with the licensee. Without this flexibility, Australian firms face unnecessary costs compared to global competitors which will ultimately be passed on to consumers.

Australia still lacks this stablecoins framework. The digital-assets bill does not unlock stablecoins as a payment instrument. Other jurisdictions are moving faster. The US is explicitly enabling regulated stablecoins for payments; the US has done this under the GENIUS Act. Australia needs something similar and needs to act now.

Uncertainty around licensing and compliance means stablecoins are still treated primarily as trading products, not as a payment infrastructure. This limits the real-world use cases such as merchant payments, cross-border settlement and programmable money. All these things would save businesses and consumers millions of dollars. But it's not too late. We must act on this now, and we can act in a bipartisan way. I'm asking the Labor government, again, to join us. Let's push Australia to the forefront of this so we can capture jobs.

Digital assets is not an isolated case; the same pattern is also emerging in artificial intelligence. Once again, Australia risks watching the global technology play out from the sidelines. Labor's instinct is to delay. In fast-moving technology markets, be it blockchain, crypto or AI, markets and capital do not wait. Delay means the talent, the money, the jobs and the expertise move offshore. The opposition supports sensible guardrails for emerging technologies including blockchain and AI, but not delay, drift or failure to compete for global talent and global capital and for productivity to make Australians wealthier.

AI, like blockchain, is being treated primarily as a regulatory risk rather than as a major economic pillar that can unlock wealth for Australia. The government has failed to articulate how Australia will participate across the blockchain or AI supply chain, from data centres to energy, from advanced computing to exportable AI services. Energy policy remains the single biggest constraint on AI growth, also inhibiting blockchain growth. If Australia repeats these mistakes in digital assets, the cost will be even greater.

The Corporations Amendment (Digital Assets Framework) Bill 2025 represents progress. It brings clarity to structure where uncertainty has persisted for far too long. But it's only the first step. Australia should not be content with just catching up and not being as far behind as it was. Australia needs to lead. Australia needs to lead to create jobs, Australia needs to lead to capture capital and Australia needs to lead to make Australians wealthy again. If we want to compete in a world of tokenised markets, blockchain infrastructure and artificial intelligence, we must move faster, think bigger and act with ambition. A framework is good, but a long-term strategy and ambition is better. This bill is a start. Now we must finish the job.

Debate adjourned.

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