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Ripple inspires Australia’s upcoming crypto regulation

Ripple inspires Australia's upcoming crypto regulation
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The final report to lawmakers was presented on October 20 and highlights Ripple’s proposals, from a principles-based regulation and digital asset classification aligned with best practices found in the UK and Singapore.

The Australian government is preparing to launch the biggest payments reform in the last 25 years, which will take cryptocurrencies and digital assets “out of the shadows”.

Treasurer Josh Frydenberg said that reforming the country’s payment systems would “widen the definition of services and products that can be regulated” with the goal of becoming a “world-leading” regulatory framework.

Besides cryptocurrency payments, the government plans to develop a licensing framework for digital asset exchanges, where more than 800,000 Australians are said to own some form of crypto-asset.

The Senate set up a committee to examine crypto regulations in March — Australia as a technology and financial hub — and solicit feedback from blockchain professionals. Ripple Labs submitted its report on June 30.

The final report to lawmakers was presented on October 20 and highlights Ripple’s proposals, from a principles-based regulation and digital asset classification aligned with best practices found in the UK and Singapore.

Ripple has proposed three principles upon which to establish an Australian regulatory framework for digital assets. The regulatory framework should be technology-neutral, and should not explicitly or otherwise endorse any particular technology. In practice, this means that financial services that use digital assets as a solution should not be treated differently from financial services that include legacy architectures, and that there should be parity in treating all technologies;

“Due to the dynamic nature of digital assets, prescriptive regulation risks becoming obsolete. Prescriptive regulation can also have the unintended consequence of impeding innovation. Therefore, we recommend that the Committee consider a principles-based regulatory framework, which will guide market participants to regulatory objectives and policies, without imposing an overly compulsive and cumbersome process in doing so,” the report continued.

The regulatory framework should use a risk-based approach to identify digital asset services that pose sufficient risks to ensure regulationand where these risks are critical to addressing them. This is in order to build a simple, secure and accessible digital asset ecosystem that will encourage investment in digital assets in Australia, while mitigating any potential risks.”

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Ripple noted that there is “no single or generally recognized definition of digital assets at present,” and provided that such assets should not be defined solely in relation to a particular technology (for example, cryptography), but for the purposes of regulation, should instead fall under a broader title such as “Digital Assets,” and are subsequently classified depending on the particular economic function and the purpose they serve.”

Ripple noted that this approach aligns with that of the United Kingdom and Singapore, which “have issued ratings that are not dependent on whether or not the business model uses distributed ledger technology.”

“recommended that Australia adopt a classification of digital assets that complies with these global practices in order to provide “clarity about the legal nature of digital assets in Australia.” He recommended that this classification provide clear distinctions
Among the payment codes, utility codes, and security codes, as follows:

Payments or token exchange: to describe unofficial original digital assets that are used as a medium of exchange and have no rights that can be enforced against any issuer;

Utility Codes: to describe those digital assets that create access rights to make use of a service or network, usually offered through a blockchain platform; And

Security CodesTo describe the tokens that create rights that mirror those of traditional securities such as stocks, bonds, security-based derivatives, and collective investment schemes.

Ripple, which has been very busy with the SEC lawsuit, is trying to influence the regulatory framework for digital assets in several jurisdictions, including the United States, as the XRP-powered company looks to reduce the “SEC hostility” towards the space.

After it was announced that Australia is about to implement a new regulation on payments and cryptocurrency, several blockchain figures came forward to comment and praise the initiative.

“Governments around the world are waking up to the fact that cryptocurrencies are already a well-established part of the global payments environment – ​​and are favored over legacy systems by an increasing number of individuals,” said Michael Morsch, CEO and Risk Management at Digital/Crypto Asset Hedge Fund, Following the recent European crypto regulation proposal, Australia has now announced its work on a similar document – and other major jurisdictions are expected to follow suit.ARK36.

Most importantly, the scope of regulation outlined by the Australian Treasurer does not appear to be overly restrictive. It is thus clear that regulators are aware of the huge economic and innovation potential of cryptocurrencies and do not want to stifle it. On the other hand, the push for digital central bank currencies suggests that regulators Malians may want to use their digital money systems to beat the non-governmental ones, including cryptocurrencies.This competition will be an interesting dynamic to watch in the next few years but one thing is for sure – major governments are now betting on the idea that crypto is the future money,” Morsch added.

Edan Yago, major contributor to Bitcoin DeFi protocol Sovryn commented: “It is only a matter of time before all payments and financial transactions are digitized in public ledgers. This transformation will unlock tremendous opportunities for cost reduction, innovation and financial inclusion. At the same time, it will advance the idea of ​​domestic payment systems and regulation. Domestic to a thing of the past. The future of money and money is digital without borders.”

Rod Weltkamp, ​​CEO of a cloud-based automated crypto-trading bot, said that (reasonable) regulation is good for the market, and it is positive to see Australia speaking out. Governments must understand that it is impossible to stop cryptocurrency, and you will miss the boat as a country if you do not cooperate. So, if you are strongly against cryptocurrencies, there is a chance that the big crypto companies will move elsewhere. Payment traffic will soon move across other countries. I hope countries understand that it is time to do something about the status quo. This gives you the ability to define yourself as a new financial center, with all the benefits associated with that.”

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