Time for a safe harbor?
While the Senate Select Committee’s final submissions and ASIC’s consultation on crypto-asset exchange traded products are underway, Australia’s regulatory framework for crypto-assets should be heading for a ‘light touch’ approach.
One light touch approach worth considering, and under increasing support, is a “safe harbor”. Safe harbors are regulatory provisions which specify that if an individual or entity undertakes specific conduct they will be deemed not to have violated specific rules. It is commonly accepted that the guidance on, and absence of rules and regulations regarding digital assets, do not provide sufficient clarity for those wishing to harness Blockchain and crypto technologies, increasingly leading to businesses leaving Australia for jurisdictions which have adopted better regulatory approaches.
This appears to have been recognised by the Senate Select Committee’s inquiry and ASIC’s recent consultation on crypto-assets. A safe harbor down under could set up standards of conduct which would allow innovation to flourish while regulators take a considered and measured approach to amending legislation.
The US Securities and Exchange Commission (SEC) has already started towards a safe harbor. In April of this year Commissioner Hester M. Peirce of the US SEC released a ‘Token Safe Harbor Proposal 2.0‘. This is intended to:
provide network developers with a three-year grace period within which, under certain conditions, they can facilitate participation in and the development of a functional or decentralized network, exempted from the registration provisions of the federal securities