Category: Regulation

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Australia Blockchain Regulation

Australian Fintech Committee Report Reveals Bullish Government Position on Blockchain

A new interim report published by Australia’s Select Committee on Financial Technology (FinTech) and Regulatory Technology (RegTech) reveals new insights into the Australian Government’s position on the future of blockchain and fintech.

The report, published one year after the creation of the committee, focuses on the potential opportunities presented by blockchain technology, as well as the ways in which novel fintech and regtech solutions can help the financial sector overcome a range of different problems.

The Select Committee on Financial Technology and Regulatory Technology’s report acknowledges the economic impact of the ongoing COVID-19 pandemic, highlighting a number of ways through which the innovative application of various decentralized technology use cases can assist Australia in moving through the pandemic crisis.

Notably, the report presents a number of use cases of blockchain technology, such as virtual signing and witnessing of legal documents or the potential for decentralized regtech platforms focused on digital identity in government agencies.

Blockchain Industry Value Headed Toward $3 Trillion

Australia’s Select Committee on Financial Technology and Regulatory Technology has been presented with a broad spectrum of information with which to create regulatory guidance, leveraging the knowledge of established Australian blockchain and fintech innovators during hearings.  

Within specific committee hearings, Michael Bacina, Partner of both Fintech Group and Blockchain Group, provided the committee with estimates that the international blockchain technology industry could be worth over  $175 billion annually within five years and $3 trillion by 2030.

Other insights presented by the report include criticism of the current regulatory approach governing the fintech and blockchain startup ecosystem, noting that the current regulatory environment is “outdated” and in many cases contradictory. With Australian fintech and blockchain startups now capturing hundreds of millions in VC investment around the country, the Australian government is actively pursuing startup-friendly approaches within the scope of the Australian blockchain roadmap in order to promote innovation and development within the nascent Aussie blockchain ecosystem.

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Crypto News Cryptocurrencies Cryptocurrency Law Regulation

$300 Billion Class Action Lawsuit Against Social Media Giants “Ready to File” as Signups Draw to Close

An impending class-action lawsuit that could see international social media giants such as Facebook, Google, and Twitter sued for over $300 billion is “ready to file,” with signups for claimants closing next week.

Announced in early June 2020, the class action lawsuit is spearheaded by Andrew Hamilton, the CEO of Sydney-based legal firm JPB Liberty. The class action lawsuit is focused on holding various social media platforms accountable for cryptocurrency advertising bans executed by throughout 2018.

The suit has already captured over $600 million USD in claims — nearly $875 million AUD — with multiple litigants. The case has already been placed before a senior barrister for review, and accuses a series of social media platforms of acting in a cartel-like manner in order to collaboratively crush the developing digital currency industry in 2018.

Hamilton, in a conversation with crypto news media, stated that he is prepared to file proceedings for the case within a 48 hour period — noting that signups for claimants are scheduled to close on August 21.

“This is a very big threat to Facebook and Google strategically, because, instead of having startups that have to fundraise all the way through and end up getting bought by Facebook or Google or someone before they become a competitive threat,”

Google, Facebook Banned Crypto Ads to “Eliminate Competition”

Initial coin offerings and other digital currency based startups, according to Hamilton, are a significant threat to the status quo of the tech tech industry. Hamilton highlights the cumbersome, slow moving nature of fundraising in the tech industry, stating that ICO’s “front-loaded” the investment process, allowing tech startups to compete on equal footing with major tech companies.

The suit focuses on the “hypocrisy” of major tech platforms such as Facebook developing and launching projects such as the Libra stablecoin, while simultaneously banning all digital currency competitors. Everyone who was in the nascent web 3.0 space at the time and planning on competing with Google or Facebook, states Hamilton, was crushed.

The suit, if successful, will see 70 percent of any settlement distributed to litigants, with 30 percent directed toward the suits funders.

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Australia Cryptocurrency Law Regulation

Hand Over Your Private Keys: $1.6bn Cyber Strategy To Target Australians, Crypto Holders

It’s no secret that Australians are subject to ever-increasing levels of government surveillance. New capacities introduced in the new $1.6 billion Morrison government cybersecurity push, however, could see Aussie crypto investors forced to hand over passwords to all devices — including hardware wallets.

A $1.664 billion increase in federal spending confirmed by Peter Dutton designed to identify and disrupt online criminal activity will provide the Australian Federal Police, the Australian Criminal Intelligence Commission, and the Australian Signals Directorate to, for the first time in Australian history, target Australian citizens. 

Details of the new powers provided to law enforcement organizations are not detailed in the new strategy, outlining only that the Australian government will now possess sufficient capability to defeat anonymising technology.

“Enforcement agencies (will) have appropriate legislative powers and technical capabilities to deter, disrupt and defeat the criminal exploitation of anonymising technology and the dark web”

The technical capabilities of the Australian government and Australian Signals Directorate have captured the attention free speech advocates across the country and remained a source of controversy since the mid-2019 raid of News Corp journalist Annika Smethurt’s home in 2019 over a news report suggesting the ASD was seeking the capability to spy on Australian citizens.

AFP Yet to Force Tech Companies to Give Access — Gain Backdoors into Major Platforms

Last week’s parliamentary inquiry into the actions of Australian law enforcement agencies revealed that neither ASIO or the Australian Federal Police have used new anti-encryption laws provided to them via 2018 anti-encryption legislation that allows the government to demand access to encrypted devices — with the threat of jail for non-compliance — to compel tech companies into revealing user data.

The AFP is currently able to demand backdoor access to virtually any tech platform operating in Australia — including cryptocurrency exchanges. AFP’s digital surveillance section Superintendent Robert Nelson noted that many platforms build specific backdoors that allow them to share data on-demand with Australian law enforcement.

“In other instances they’ve actually built a capability or modified parts of their system to be able to facilitate that voluntary assistance request.”

During the parliamentary hearing AFP commissioner Reece Kershaw stated that the powers provided to the AFP allowed the law enforcement agency to overcome technical challenges present in cases where the encryption of data and the use of  cryptocurrency to conceal payments made it difficult to capture evidence.

The new powers set to be provided to Australian law enforcement will further enhance the capability of the Australian Government to demand the passwords and private keys of users, regardless of how or why data is encrypted — potentially forcing cryptocurrency holders to divulge the private keys to their devices.

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Australia Bitcoin Crypto News Regulation

TikTok Could Hack Your Bitcoin Wallet Right Now — Australian Government Considers “National Security Risk” App

The Australian government has stated that popular Chinese-owned social media platform TikTok is under scrutiny for any potential risks it may pose to user privacy or potential national security risks as new evidence emerges that TikTok could compromise user security — including cryptocurrency wallet data.

The social media app, owned by China-based Bytedance, recently opened new offices in Australia amidst international privacy concern that saw TikTok banned in India and US President Donald Trump promoting a campaign to ban the app as part of a new presidential re-election campaign.

Prime Minister Scott Morrison has stated that the Australian Government is currently “having a good look” at TikTok, hinting that an Australian TikTok ban is not out of the question:

“If we consider there is a need to take further action than we are taking now, then I can tell you we won’t be shy about it”

TikTok Accused of Leaking User Data

Concerns regarding the potential security issues presented by TikTok aren’t limited to national security, however. Independent penetration testing and cybersecurity firm Penetrum has published extensive documentation focusing on TikTok, condemning the app for spying on and gathering the personal information of all users.

Penetrum data, published via a public data repository and presented via a security analysis white paper, levels concerning claims against TikTok, claiming that over 37 present of known IP addresses linked to the platform are based in China and that the application harvests and shares data with third party vendors and business partners.

What does this mean for cryptocurrency holders, investors, and traders that use smartphone-based wallet applications, though?

Independent Audit Highlights Severe Security Risk

Penetrum data indicates that TikTok presents a severe security risk due to:

  • Always-enabled remote webview
  • OS-level command access
  • Compromised device information and GEOlocation data
  • User activity monitoring

Based on the evidence presented by Penetrum, TikTok is able to read and share clipboard — or copied and pasted text — on user devices, or access camera functionality without altering the user. 

While many wallet apps generate cryptocurrency wallets without user string input, there are many extant apps in use today that allow users to paste private keys when importing wallets — potentially revealing them to malicious applications.

While Penetrums findings have yet to be backed up by additional studies by other third-party cybersecurity firms, the international concern directed at TikTok due to privacy concerns should cause smartphone crypto wallet users to consider whether the social media platform is worth the risk.

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Crypto Exchange Cryptocurrency Tax Regulation Trading

Crypto Exchanges Provide ATO, US Secret Service With Trade Data & Analysis Tools

Cryptocurrency is widely touted as a pseudo-anonymous means of value transfer free from the restrictions of government bodies and related oversight. Anonymous digital currencies, however, are only as private as the platforms that are used to trade them.

Government bodies around the world, including the Australian Taxation Office, now have access to a broad spectrum of data delivered to them by major exchanges such as Coinbase — including advanced blockchain analysis tools.

US Secret Service Gains Access to Blockchain Analysis Tools

Recent public records published by the US Government reveals that the US Secret Service, part of the US Department of Homeland Security, has signed a four-year agreement with Coinbase that will provide the agency with access to the platform’s advanced blockchain analysis software.

Coinbase Analytics is a cryptocurrency analysis platform that allows government agencies and other parties to track the flow of cryptocurrency across multiple blockchains, facilitating the identification of cryptocurrency users by linking transactions and wallets to specific exchange accounts and fiat/crypto bridges.

ATO Leverages Exchange Data to Target Aussie Traders

The US Government isn’t the only authority making use of cryptocurrency exchange data. The Australian Taxation Office now has access to bulk records from Australian cryptocurrency exchanges, which is used to ensure that Australian crypto traders are meeting their tax obligations.  

The ATO currently operates a joint effort with the Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Australian Securities and Investment Commission (ASIC) to link cryptocurrency balances and trades to Australian traders. 

While Bitcoin and other cryptocurrencies are often referred to as “anonymous” value transfer systems, there are many ways through which cryptocurrency exchange users can be tracked and identified. The ATO issued over 350,000 tax warning letters to Australian crypto traders earlier this year, demonstrating the results of exchange data gathering and analysis.

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Cryptocurrencies Cryptocurrency Law Regulation

Cashless Australia: COVID-19 Pandemic Accelerates Digital Payments as Gov Prepares to Criminalize Certain Cash Payments

The COVID-19 pandemic has halved cash payments throughout Australia as health-conscious consumers shift towards digital and contactless payment options. With bank branches and ATMs set to slowly disappear, Australia is positioned to be one of the most cash-free countries in the world.

Commonwealth Bank insights indicate that Australia will be wholly cashless by 2026, ranking Australia as the 6th most cashless society in the world. A cash-free future, however, has many Australians concerned.

While a cashless economy allows for greater financial security, queuing times, more efficient taxation, and more efficient hygiene routines, opponents of the cashless revolution cite the necessity of cash transactions for the unbanked and underbanked.

Australian Government Set to Legislate Against Cash Payments

Australia’s cashless future, however, could be mandatory. Government limits on cash transactions that present the risk of prison time if violated are already in the works — in 2019, the Morrison Government proposed legislative changes that would criminalize cash transactions in excess of $10,000.

The Currency (Restrictions on the Use of Cash) Bill 2019 is yet to be finalised, but will establish four new criminal offenses that relate to cash payments that exceed $10,000 for goods or services transacted between two individuals or parties.

Notably, these offenses will apply to anybody regardless of their awareness of the new legislation, should it pass, with a maximum penalty of two years in prison and or a $25,200 fine. The core premise of the bill focuses on eliminating the “black” economy, minimizing money laundering, bribery, terrorist financing, and tax evasion. 

Introducing legislation that criminalizes cash transactions over a certain amount, however, is likely to accelerate the adoption and use of cryptocurrency. The Restrictions on the Use of Cash Bill specifically refers to cryptocurrency, stating:

Crypto-currencies and other digital currencies are generally unregulated and often do not create clear records of transactions in a form that can easily be used to identify the parties to a transaction.

Cryptocurrencies a Dark Horse in the Race Towards Cashlessness

The Treasury’s Black Economy Task Force is aware of the virtually untraceable nature of cryptocurrency transactions not associated with a crypto-to-fiat bridge, noting that some non-cash payment methods, including the many cryptocurrencies which are being traded, are just as anonymous as cash. 

With the COVID-19 pandemic accelerating the use of digital fiat payments and significantly contributing to the adoption and use of cryptocurrency payments, Australia is indeed transforming into a cashless society. 

Whether or not the new digital payment platforms used by everyday Australians in our cashless future will resemble centralized fiat currency or decentralized cryptocurrency virtually immune to legislative control, however, remains to be seen.

Categories
Australia Crypto Exchange Regulation

Australian Crypto Exchange Ecosystem Explodes, Exceeds 312 Registered Exchanges

The Australian crypto exchange market has experienced a significant growth surge in the last year, overcoming sluggish crypto price movements and global economic strife to add over 70 new crypto exchanges to the ranks of Aussie trading platforms.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) confirmed earlier this year that over 312 cryptocurrency exchanges are now registered in Australia, a significant increase over the 246 exchanges active in February 2019.

AUSTRAC, which functions as Australia’s financial intelligence agency and is responsible for Anti-Money Laundering regulation, has regulated cryptocurrency exchange platforms in order to minimize the risk of criminal behavior such as terrorism financing, cybercrime, and money laundering.

Any exchange platform that intends to launch a crypto trading platform in Australia must first formally register with AUSTRAC and provide evidence that the platform will implement anti-money laundering and counter-terrorism financing controls.

AUSTRAC takes cryptocurrency exchange regulation seriously — to date, the regulatory body has canceled the registration of multiple platforms that include several cryptocurrency exchanges and a number of cryptocurrency ATM machine businesses.

Notably, AUSTRAC has revoked the licenses of AUSCOIN ATM and MK Buy & Sell, platforms associated with Lamborghini-driving Bitcoin trader Sam Karagiozis.

A joint raid executed by AUSTRAC and the AFP saw properties linked to Karagiozis raided in 2019. Karagiozis, subsequently charged with drug-related offenses, is currently fighting for the return of assets confiscated during the raid.