Alice Jordan-Baird (Gorton, Australian Labor Party) Share this | Hansard source

I rise to speak in support of the Corporations Amendment (Digital Assets Framework) Bill 2025, brought forward by the Minister for Financial Services, and I commend him for doing so. We live in a digitised world. We've seen these developments, and we've lived them. I remember getting my sister's hand-me-down LG flip phone. My first experiences on the internet and social media were ranking my top friends on Myspace, joining Facebook in early secondary school and my first smartphone. Right now, we're experiencing the AI revolution. We've seen technology develop leaps and bounds over the last few decades. In financial markets, it's no different. Digital assets are reshaping finance right across the globe. We've seen the digitisation of assets—cryptocurrencies, virtual currencies and central bank digital currencies. We're interacting with blockchain technology, the decentralisation of banks as intermediaries and tokens that represent real-world assets such as property and bonds being traded instantaneously. It has picked up globally, and we're seeing it in Australia too. Last year, the Independent Reserve's cryptocurrency index report reported that approximately 6.2 million Australian adults now own or have owned cryptocurrency. That's 31 per cent of the adult Australian population. Digital finance is unlocking new ways to invest, trade and transfer wealth, with faster settlement and lower costs. Right across the world, central banks are exploring digital currencies, and global institutions are experimenting with tokenised securities.

This is all great. It's unlocking capital market and bringing new investments. But the problem here—and there is a problem—is that the digitisation of assets and currency has emerged without regulation. Put simply, financial markets and the way people hold and exchange value have changed, but our laws have not. The legislation has not kept up, and we need it to because without clear rules there are risks. We're talking about a high volatility in markets, concerns about privacy and risks of cyberattacks. And this all comes alongside a lack of regulation or oversight. People are accumulating digital assets without financial law safeguards. We need this now more than ever because, as more people interact with unregulated digital assets, more people are exposed to these risks. And this has real world impacts. Take the collapse of the FTX exchange, the third-largest cryptocurrency exchange at the time. FTX collapsed over 10 days in November 2022, which exposed an $8 billion hole in FTX's accounts. This was a colossal fraud. Consumers were devastated and confidence was shattered. There was a massive loss for customers as their funds were misappropriated and mismanaged by the company. Take this as a cautionary tale, because one of the most devastating parts is that regulation could've provided the oversight needed to prevent such fraud and mismanagement.

We need our legislation to adapt to the emerging facets of society. As a Labor government, we're not new to this. Where social media created challenges, we legislated a minimum age ban to protect Australian children. Where gambling online became too easily accessible, we introduced the self-exclusion register BetStop to mitigate harms on individuals. Where digital connectivity blurred work-life boundaries, we legislated the right to disconnect, and the digitisation of assets and currency is no different. Right here, right now, we will legislate to introduce regulations to protect people's assets and livelihoods.

This bill is about trust. It's about transparency; it's about accountability. We're futureproofing our financial system so it remains strong, fair and competitive in this rapidly changing world. We're also reducing and closing loopholes in the digital assets system. Again, there are benefits to digitised assets. When you're trading online, you're getting more efficient and faster transactions and there are reduced costs for you on those transactions. It also allows for increased financial inclusion. Online assets are readily available and accessible, and provide individuals and businesses with equal measures of opportunities to use financial services.

To fully reap these benefits, now and into the future, we need to build trust in the system, and the system needs to be held accountable. To do that, we need to introduce regulations. If you want to regulate something that is not currently properly regulated, the first step is to define what that thing is. That's why we're introducing two new types of financial products into Australia's financial services laws: digital asset platforms, DAPs, and tokenised custody platforms, TCPs.

This will ensure that businesses holding and dealing in clinical digital assets are subject to the same consumer protections and licensing requirements that apply across the financial system, including prohibitions on misleading and deceptive conduct and unfair contract terms, design and distribution obligations and supervision and enforcement by the Australian Securities and Investments Commission. We use this kind of regulation to prevent businesses from gaining an unfair advantage and exploiting consumers by making misleading claims about their products or services. It means that consumers are more aware of the risks that they are taking when they interact with digital assets as well as their own rights they have under the financial services laws.

This bill also accounts for licensing, which is another measure for accountability and transparency that does not currently exist in the industry. Operators will need an Australian financial services licence. This ensures that they manage conflicts of interest and have dispute-resolution systems in place. We're using the existing licensing framework, which avoids the need for a new regime and which reduces complexity and compliance costs for businesses. We're also expanding who these licences should be held by to anyone providing services in relation to digital assets or tokenised custody platforms. That means if they're advising on, dealing in or arranging for others to deal in digital assets they will be treated as providing a financial service. This means that, just as all other financial service providers do, they'll also need to hold an Australian financial services licence and they'll be subject to those same measures of accountability.

Operators and service providers should be acting efficiently, honestly and fairly, and this legislation is ensuring that those expectations are met. On top of that, they'll meet tailored obligations for digital assets. This includes minimum standards for custody, segregation, reconciliation and transaction settlement. This is good for consumers. At its core, this legislation is about protecting consumers by mitigating risk.

It's worth noting that digital investments—all investments—do inherently involve risk, but involvement of risk does not negate the need for adequate consumer protections, and it does not absolve the service providers from the responsibility to conduct their businesses fairly and with a degree of transparency. That's why in Australia we have minimum standards in place to protect consumers, and it's why this bill is extending those consumer protections to the realm of digital finance. This is the reason it's so important that we're legislating the two new types of financial products into Australia's financial services laws, DAPs and TCPs. DAPs and TCPs are where operators hold client digital assets to facilitate trading, lending or other transactions.

The key risks associated with these custody focused arrangements—credit liquidity, counterparty, operational fraud and cyber risks—are the same types of risks already mitigated by Australia's financial services laws. By extending Australia's financial services laws to better cover these, we're giving consumers and industry the certainty that the same consumer protections and licensing obligations apply to comparable custodial activities. This includes prohibitions on misleading or deceptive conduct, unfair contract terms, and requiring providers to hold an Australian Financial Services licence. These measures ensure that operators of digital asset businesses are held to the same high standards of fairness, transparency and integrity as other financial service providers.

While we're ensuring digital trading is matching those same high standards which already exist for financial service providers, we're also ensuring it matches the standards which protect Australians deposits in banks and investments in the stock market. These are the standards Australians expect, and we are matching those standards in the digital trading economy. We will not rest on our laurels when we see these new technological innovations come through. This is a change that the sector has been asking for, for a long time. We're giving Australians confidence that when they use a regulated platform their assets are protected by strong standards—the same standards that protect their deposits in banks and their investments in the stock market. We're giving businesses certainty to invest and innovate in Australia, knowing the rules are clear and globally aligned.

This is not regulation for regulation's sake. It is smarter regulation building on proven financial services laws that Australians trust—and trust matters. Trust means increased trading. It means attracting investment, creating jobs and growing our digital economy. Without this sector gaining the trust of consumers and businesses, we can't reap these benefits. That trust is born from regulations that are there to protect consumers and businesses. That's what we're introducing.

We're not alone in this legislation. This bill is aligning Australia with global standards set by the Financial Security Board and IOSCO. It's here to keep us competitive with jurisdictions like the US, EU, UK and Singapore. The EU has already legislated the markets in the cryptocurrency regulation. This mandates that crypto asset service providers must be authorised to meet transparency and consumer protection standards. It protects consumers by introducing rules around transparency and information, asset safeguarding, marketing and advertising, complaints, and more. These rules seek to ensure that in the crypto space consumers are: properly informed of risks; not misled by marketing and advertising; won't lose their assets if insolvency occurs; and have a pathway to raise issues with providers when they arise. The UK is also looking to regulate this space by 2027. And, do you know what? The UK is getting it right. We should be meeting the regulation standards set by overseas jurisdictions.

If we also get this right, which this bill intends to do, we'll be attracting investment, creating jobs and positioning Australia's financial system as a leader in innovation. Global institutions are experimenting with tokenised securities, central banks are exploring digital currencies, and investors are demanding safe, regulated ways to participate. It's unlocking capital markets, and when we do it too it'll be strengthening Australia's competitiveness as a financial sector.

Unfortunately, a factor that we're dealing with is that cryptocurrency remains a vector for scams and fraud, and it's a serious risk. Australians have lost millions to schemes that exploit gaps in regulation and consumer understanding. These Australians have invested their hard-earned money, hoping that a new technology would lead to beneficial outcomes, advancements and efficiencies in digital payment systems. However, what we know is that many consumers have experienced immense volatility and risk not found in traditional investment opportunities.

Take 72-year-old pensioner Dorothy. In November last year, the ABC reported that Dorothy had lost $12,500 to a crypto ATM scam. Dorothy was instructed by a scammer over the phone to withdraw all of her savings and deposit the cash into a bitcoin ATM machine. For Dorothy, this has had really real impacts. These scams put Australians in an incredibly vulnerable position. Dorothy did not deserve to lose that financial security, and she certainly deserved better from our legal systems. Dorothy should have had stronger regulations in place to prevent the scam in the first place. She's not the only one. Scammers have also impersonated exchanges, informing users that their accounts have been breached and directing them to transfer their cryptocurrency to a 'trust wallet' belonging to a scammer. Scammers have even created fake crypto trading apps, targeting potential investors and then leaving them with significant losses.

We've got to do better for Australians. So that's what we're doing now. This bill is good for consumers, it's good for business and it's good for Australia's reputation as a leader in financial regulation. And it's an overdue change—one that the sector has been calling for, for some time now. This bill is mitigating significant consumer losses by addressing regulatory gaps, because digital asset consumers should have the same protections as are available to traditional finance.

This bill will provide a clear, consistent framework for businesses operating in Australia's growing digital asset sector, and it's telling foreign powers that, in a world where technology and our finance systems are evolving so fast, Australia supports technologically-driven productivity, competition and long-term economic resilience. We're giving businesses certainty to invest and innovate in Australia, knowing the rules are clear and globally aligned. I commend this bill to the House.

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