Blockchain Australia CEO Dismisses US Regulation by Enforcement

The chief executive of Blockchain Australia, Simon Callaghan, petitioned the Federal Government to expedite the crypto regulatory process. As the new head of the top-ranked crypto industry body, he cautioned Australian regulators to distance themselves from the approach deployed by the United States.

Emulate Hong Kong and Singapore Considered Approach to Crypto Regulation

The new Blockchain Australia chief expressed optimism if the government crypto regulatory framework references the templates deployed in the UK, Singapore, and Hong Kong. Callaghan inaugural speech during the country’s Blockchain Week asserted his position would steer crypto-friendly rulemaking.

Callaghan’s speech on Monday, June 26, restated that he seeks to avoid replicating the decision adopted by the US Securities and Exchange Commission (SEC). He decries the move by the Garry Genseler-chaired SEC to sue the two largest exchanges in the world by transaction volume. He lamented that the SEC in the series of enforcement actions, labeled over 68 tokens as securities. 

Callaghan held that regulation by enforcement mirrors the utilization of the hammer, with all components becoming the nail. He considers the SEC approach unsuitable for Australia. 

Callaghan expressed his reservation against the US SEC approach for setting an erroneous template to regulate the crypto assets industry. His pronouncement came shortly after Blockchain Australia unveiled him as the body’s chief executive. 

Criticism of Regulation by Enforcement Adopted by SEC

Callaghan criticism of regulation by enforcement arises from the point of information obtained when serving as the head of the digital assets initiative at Cambridge University and co-founder of MOOPS Tech, which specializes in corporate service. His previous engagement involved being the Asia regional executive for the embattled crypto lender Celsius. He would quit the role several months before the crypto lender implosion. His journey features a brief stint as an executive at crypto lender Vauld.

The appointment of Callaghan comes after the previous chief executive Steve Vallas left Blockchain Australia in July 2022. The body would welcome Laura Mercurio in September 2022 only to quit weeks later, citing divergence in vision. 

Callaghan is joining Blockchain Australia after the body operated without an advocate for over eight months. His assumption of the new role is timely to represent 112 members comprising Circle, Mastercard, Ripple, and Binance Australia, loudly demanding clearer regulation. 

The chief executive shares in the membership’s desire to know the goalposts for them to run businesses, build innovative technologies, and create jobs. Callaghan acknowledged that the Australian government is yet to embrace the hardline stance on digital assets. He emphasized that the Aussie approach differs from the approach adopted by various American regulators and supported by the Biden administration.

Callaghan to Spearhead Principle-based Approach in Crypto Regulation

Callaghan remarks align with the principle-based approach adopted during the ongoing token mapping exercise in ascertaining how to classify digital assets. The process is critical given that Australia expects legislation later, at least in 2024.

Callaghan reiterated that the current Labor Party-led government is yet to portray taking a strong position. He perceives the considered approach as critical and viable for Australia to safeguard consumers and nurture digital assets innovation. 

The Blockchain Australia chief expressed confidence that the legislators would draw inspiration from the UK, Singapore, and Hong Kong. He lauded the milestone realized in the three jurisdictions to develop regulatory schemes prioritizing balancing innovation and safeguarding consumer protection. Regulators in the countries perceive the legislation as the catalyst that will benefit their countries through innovation, job creation, and considered integration with the broader financial ecosystem. 

Hong Kong’s HKMA Offers Lessons to Other Countries

Callaghan cited the reports conveyed by Hong Kong Central Bank in early June to obligate leading banks to embrace crypto exchanges into their clientele. The move to facilitate admission of crypto exchanges in the administrative region’s banking system sought to attract international crypto investors and firms. 

In support, Callaghan commended the Hong Kong Monetary Authority’s (HKMA) move to encourage the region’s bank to accommodate the digital asset sector as suitable. His remarks reference the 2021 finding by the Australian Senate committee that urged crypto firms to challenge the debanking decisions by financial institutions. 

The report cautioned banks to conduct due diligence on the digital assets firms rather than impose blanket bans on the entire sector. Nonetheless, two leading Australian banks, Westpac (WBC.AX)  and Commonwealth Bank of Australia (CBA.AX), announced limits, pauses, and blocks on payment transactions to the local crypto exchanges in early June. The banks cited the increased threat of financial scams. 

Callaghan echoed the 2021 report by the Senate Committee imploring the banks to avoid issuing blanket bans on crypto for aiding scams. Instead, he challenges the banks to consider case-by-case evaluation guided by data. As such, he confessed to scheduling meetings with the two banks to understand their stance on the matter.