Australian Regulatory Update – 14 November 2022

By Jim Bulling and Anabelle Weinberg

1. Bitcoin plunges as FTX Trading files for bankruptcy – calls for more transparency from crypto exchanges

Bitcoin has plunged following the fall of FTX Trading (FTX). It remains unclear when or if traders will be able to recoup their money from FTX.

In response to the collapse of FTX and in an effort to retain confidence in their platforms, a number of large crypto exchanges have published Proof of Reserves showing that the levels of assets that they hold match their liabilities to customers.

Globally, regulators are calling for cryptocurrencies and exchanges to be more heavily regulated to minimise the risk for consumers. Brian Armstrong, Coinbase CEO, has said that the future of crypto should involve “sensible regulation for centralized exchanges and custodians” across the globe.

What does this mean in Australia? It is likely that we will see further regulation in this sector which will promote more transparency from crypto exchanges, calls for licencing in the crypto sector, and the implementation of local custodians.

2. Increased opportunities to invest in the environment and climate change

BetaCarbon has launched their first platform allowing Australians to invest in Australian Carbon. BetaCarbon purchase Australian Carbon Credit Units (ACCUs) which are issued by the government to carbon capture projects. They then create corresponding digital Australian Carbon Tokens (BCAU) that are issued to retail investors. One token represents 1kg of CO2 emissions captured or avoided by the carbon capture projects.

BCAUs are not ACCUs, but rather are tokenised versions of ACCUs. Under their token-holder agreement, BetaCarbon only mints BCAU tokens equal to the ACCUs it holds.

Previously, retail investors were unable to invest in ACCUs without themselves being registered with the Australian National Registry of Emission Units which requires meeting accounting and background check requirements. The company has sold more than $4 million worth of tokens in its pre-launch phase.

More and more investors are looking to invest their money in a way that will benefit the environment or reduce the impact of climate change and corporations are providing investors with novel ways to do this. As demand for those products increases, issuers will need to ensure that they comply with the existing regulatory requirements including the prohibitions against misleading and deceptive statements and conduct, as well as disclosure obligations.

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