Digital ID bills passed
The much-anticipated Digital ID bill, together with the Digital ID Bill (Transitional and Consequential Provisions) has finally passed the Australian Parliament this week.
The new legislation will broaden the availability of digital ID in
Under the new system, individuals will be able to use smart wallets to link credentials to the chosen identity app.
The Government expects the Bills will:
-
strengthen a voluntary Accreditation Scheme for digital ID service providers that wish to demonstrate compliance with best practice privacy, security, proofing and authentication standards;
- enable expansion of the Australian Government Digital ID System for use by the Commonwealth, state and territory governments and eventually private sector organisations; and
- embed strong privacy and consumer safeguards, in addition to the Privacy Act, to ensure users are protected
- develop and consult on legislation to licence and regulate platforms that hold digital assets and progress related reforms, including continuing exploratory work on Central Bank Digital Currencies, asset tokenisation and decentralised finance
- introduce a new regulatory framework for payment service providers (including digital wallets and electronic stored value providers), including licensing and a mandated ePayments Code.
$37.3 million over four years from 2024-25 to administer and enforce mandatory industry codes for regulated businesses to address scams on their platforms and services. Telecommunications, banks and digital platforms services related to social media, paid search engine advertising and direct messaging will be initially targeted. The funding is allocated to theAustralian Competition and Consumer Commission (ACCC), theAustralian Securities and Investments Commission (ASIC) and theAustralian Communications and Media Authority (ACMA).$6.3 million in 2024-25 for the ACCC to improve public awareness of scams and help the public to identify, avoid and report scams$1.6 million over two years from 2024-25 for theTreasury to develop and legislate the overarching Scams Code Framework. Budget Measures Paper No.2 notes:$10.0 million over four years for resourcing for ASIC to investigate and take enforcement action against market participants engaging in greenwashing and other sustainability-related financial misconduct$5.3 million over four years to deliver the sustainable finance framework, including issuing green bonds, improving data and engaging in the development of international regulatory regimes related to sustainable finance with funding allocated to for theTreasury , ASIC and theAustralian Prudential Regulation Authority (APRA )$206.4 million over four years to ASIC andAPRA to improve the data capability and cyber security of those regulators.$160.8 million over two years for the Australian Transaction Reports and Analysis Centre (AUSTRAC) to expand its regulatory, intelligence and data capabilities and provide guidance to newly regulated entities.$7.0 million over four years to support implementation of the anti-money laundering and counter-terrorism financing (AML/CTF) legislative reforms capable of delivery in the Pacific.$145.4 million over two years from 2024-25 to maintain theNational Measurement Institute's core scientific measurement and ICT capabilities and to support current site operations and future planning.$78.7 million for upgrades to information and communications technologies to enable the ATO to identify and block suspicious activity in real time.$24.8 million to improve the ATO's management and governance of its counter-fraud activities, including improving how the ATO assists individuals harmed by fraud.$21.6 million over four years to establish an AI advisory body within theDepartment of Industry, Science and Resources - the National AI Centre (NAIC).$15.7 million over two years to support industry analytical capability and coordination of AI policy development, regulation and engagement activities across government.$2.6 million over three years from 2024-25 to respond to and mitigate against national security risks related to AI.
The Bills are expected to receive Royal Assent in coming weeks and to commence by
From commencement, the
While some critics previously complained that the bills was expedited through the
Improving safety online is a priority for us and legislation will ensure strong independent oversight is in place to support the expansion of the Australian Government Digital ID System from mid-2024.
And:
We've spoken with business, community and privacy groups to ensure the Bill will deliver the privacy safeguards, accreditation options and consumer safeguards they expect
Gallagher also highlighted that the digital ID scheme will remain voluntary and alternative methods will be available for those that do not wish to use digital identity verification processes. The Government has budgeted AUD$145.5M to implement regulation and oversight of the scheme.
The danger of
The Australian Federal Budget for FY24-25 was announced last night with broad changes across key areas and new funding allocation for regulators and initiatives. The changes are sweeping with some noteworthy priorities sure to affect
Modernising Digital Assets and Payments Regulation
The Government will provide
The Government will consider future funding requirements to implement the proposed reforms informed by the development of legislation.
A number of regulators get a big shot in the arm across a variety of different priorities including the development of the "Scams Code Framework", measures to promote and enforce sustainable financial markets and Data Capability. Some of the highlights:
Partial funding for this measure will be held in the Contingency Reserve pending development of the preferred legislative approach for the Scams Code Framework.
Taxation
The paper is silent on funding for the much hoped for reforms following the
However, amongst a plethora of tax concessions and cuts for small businesses and individuals the paper also details that the ATO will receive additional funding to beef up its compliance capabilities to counter fraud and other instances of non-compliance by taxpayers. This includes:
Responsible AI
The government also turns its attention to the development of AI policy with some target funding on several initiatives in this space including:
Finally, we have some noteworthy support for Psiquantum, the
The budget papers report that:
Additional funding of
Budget Takeaways
Reading the Federal Budget tea-leaves gives us only broad insight into the allocation of funds but it is clear that the Australian Government intends to press ahead with the proposed regulatory reforms for regulating digital asset platforms. The Government are clearly hedging their bets on future funding which does seem to suggest a lack of clarity in anticipating required funding for regulators to implement any proposed reforms. However, the funding statement for AUSTRAC, who currently impose a registration requirement on digital exchanges, does include a mention of "guidance to newly regulated entities" which may provide some insight into the expectations Government have as to which entities will be involved in the proposed regulatory reforms.
There is a lot to be learned from the budget, but it is difficult to have certainty on the direction these initiatives will take. On a general overview, more funding for digital innovation and tech is a very good thing. The government just has to be cautious in finding the balance between promoting innovation, and taking enforcement actions against true harm to Australians.
Regulation need not be heavy, nor light. It should be smart.
Kraken wrestles SEC over regulatory waterlin
Global crypto exchange Kraken has pushed back in litigation with the
In a filing on 9 May, Kraken argues that the SEC:
has not identified any investment contracts that were (or could be) traded, brokered, or settled on Kraken.
Kraken also argues that the agency failed to satisfy elements of the Howey Test, a 1946
These issues are central to the
Kraken's filing follows its motion to dismiss the
Kraken has also sought to rely on the "major questions doctrine" in its most recent filing. The doctrine, which has been often cited by crypto firms, asserts that if an agency wants to decide on an issue that has major national significance, it has to be supported by "clear congressional authorisation".
In the April filing, the SEC asserted that it is not "assuming new powers":
To argue that the SEC is assuming new powers in doing so here suggests that new technologies are beyond the scope of traditional securities law. They are not...
Kraken is not alone in its woes with the SEC.
Kraken issued a response to the SEC action in a blog, stating its unwavering commitment to provide its services:
We disagree [with the
Kraken also asserts SEC registration is impossible and there is no path to compliance.
The stage is now set for a hearing on Kraken's motion in June. The outcome of this case will likely set important precedents on the
In the judgment (in Dutch) and the media release (in English) published by the court, the court labelled
combines maximum anonymity and optimal concealment techniques with a serious lack of functionalities that make identification, control or investigation possible.
The court rejected arguments that
automatically performs the concealment acts that are needed for money laundering.
As for Pertsev's subjective state of mind in relation to the crimes, the court said he was aware that
The court sentenced Pertsev to imprisonment for 5 years and 4 months. It also ruled that his
Many fear that this judgement will set a dangerous precedent for software developers, including two other
With Pertsev's sentence, all eyes are now on the forthcoming US trials. The
The continuing legal battle will likely have broad ramifications for software developers as the US and Dutch governments seek to impose liability on
Sheriff of
The
A Wells Notice is a document used by the SEC to inform a person or entity that it has started an investigation and, unless the target can persuade them not to, that they intend to bring charges for securities laws violations. Wells Notices are typically followed by enforcement action, and almost always have been in the crypto space.
Robinhood had previously attempted to register as a special purpose broker for digital assets with the SEC. Spearheaded by Chief Legal Compliance and Corporate Affairs Officer,
According to reports, Robinhood went through a 16-month process under which it supplied documents and information to the SEC, only to be abruptly told the process was over and the registration is unsuccessful.
After years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to 'come in and register,' we are disappointed that the agency has decided to issue a Wells Notice related to our
We firmly believe that the assets listed on our platform are not securities and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be on both the facts and the law.
The SEC has been unrelenting in its unofficial regulation by enforcement policy over the past few years and has been more and more transparent about seeking to prevent crypto businesses operating in the way that crypto permits, going so far as to allege in an appeal filing that
The regulation by enforcement approach has made its way to
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