Home / Advice / Pressure on advisers to sharpen crypto knowledge
Pressure on advisers to sharpen crypto knowledge
Advice

Coalition Senator Andrew Bragg may have become a hero to digital asset and cryptocurrency enthusiasts in Australia and around the world. The release last week of the Senate Select Committee on Australia as a Technology and Financial Centre’s Final Report flagged a number of recommendations that will further the legitimacy of the burgeoning sector.

The profile of a typical financial adviser in Australia is male, and over 50 years of age, by no means at the centre of the current cryptocurrency boom that has seen the price of Bitcoin consistently reach new all-time highs. On the whole, it is the younger cohorts that are embracing the decentralisation of the financial system, yet the proposals put forward may force advisers to invest some time understanding the sector.

According to the report, some 25 per cent of Australia’s 25 million people have held or continue to hold cryptocurrencies. The lack of regulation, combined with concerns from compliance teams, legal offers, and professional indemnity insurers has made it difficult for advisers to embrace the sector, despite the track record of embracing innovative products including exchange-traded funds.

Australian cryptocurrency marketplace and educator Cointree has said that the inquiry marks a key milestone in Australia’s relationship with digital assets, which will play an increasingly significant role over the coming decades.

“It’s clearly a sign that the industry is maturing,” says CEO Shane Stevenson.

The recommendations, and they are only recommendations at this point, stand to benefit both investors, prospective asset managers, and advisers, instilling greater confidence in security and transparency. The establishment of a “market licensing regime,” not unlike the Australian Stock Exchange, for digital currency exchanges is a clear plank of this. This entity will seek to apply capital adequacy, auditing, and responsible person tests as they would any other marketplace.

Stevenson says, “while it’s good progress for crypto exchanges like Cointree, more importantly, the inquiry is great news for crypto traders. As the report mentioned, 25 per cent of Australians have traded crypto, and more clarity around regulations is going to give them more protections as consumers.”

The committee also recommended the government establish a custody and depository regime for digital assets, with minimum standards, which has been a common concern expressed over recent years by professional investors. Of most interest to advisers will be the commitment to conduct a “token mapping exercise,” or what will ultimately become a catalogue of digital assets of all kinds.

“If these new regulations are implemented, it will allow larger institutions like pension funds to enter the space with more significant mandates. If these institutions allocate even a small percentage of their portfolios toward crypto, it will likely drive crypto prices much higher,” Stevenson suggests.

Whilst the majority of Australia’s funds and exchanges operate with access to a licensing regime, not all do, with expectations the implementation of these recommendations will further “weed out any undesirable players.”

One of the more interesting proposals was to offer a company tax rate discount of up to 10 per cent for those crypto-mining organisations that source renewable energy.

Ultimately, this shows a forward-looking government and a prompt for advisers to start to research the sector more widely.




Print Article

Leave a comment

Your email address will not be published. Required fields are marked *

  • Related
    Advice
    ESG question answered: ‘green’ super funds outperform

    The Responsible Investment Association of Australasia delivered an early Christmas present for ESG investors and trustees alike, confirming the long-debated question as to whether ‘green’ or ‘responsible’ super funds outperform. The answer was a resounding yes for those funds that are categorised as leaders according to the RIAA’s extensive survey and due diligence process. The…

    Drew Meredith | 6th Dec 2021 | More
    Advice
    As adviser numbers dwindle, pressure turns to industry funds

    As the FASEA exam deadline of 1 January 2022 nears, the significant impacts on the financial advice industry continue to garner headlines. According to reports, total adviser numbers have now fallen to below 19,000 with many more set to leave in 2022. Similarly, statistics suggest there are as many as 2 million unadvised clients in…

    Drew Meredith | 6th Dec 2021 | More
    Advice
    Measuring impact key to delivering on UN SDGs

    Since their adoption, the 17 Sustainable Development Goals (SDGs) have been a mixed bag with a long list of lessons learned by United Nations member states and private market investors alike.  The 17 SDGs present an opportunity to invest in the sustainable future of people and the planet. The opportunities cover a wide array of…

    Ishan Dan | 6th Dec 2021 | More
    Popular
    1
    Evergreen ratings highlights new venture capital prospect
    Ishan Dan | 18th Nov 2021 | More
    2
    IN60 with Andre Roberts from Invesco
    The Inside Adviser | 18th Oct 2021 | More
    3
    INSight#118 with Ashok Bhatia from Neuberger Berman
    The Inside Adviser | 17th Nov 2021 | More
    4
    INSight #113 with Sebastian Evans from NAOS Asset Management
    The Inside Adviser | 15th Nov 2021 | More
    5
    The Principals’ Community forges its own path
    Staff Writer | 18th Nov 2021 | More
    6
    As adviser numbers dwindle, pressure turns to industry funds
    Drew Meredith | 6th Dec 2021 | More