Is Australia lagging behind in the global crypto race?
The global crypto market is a vast (albeit volatile) entity, and one that boasts a total market capitalisation value of around $2.4 trillion at present.
Interestingly, this has peaked above $3 trillion earlier this year, while the market was gripped by a sustained bull run that saw market leading token Bitcoin (BTC) peak above the $68,000 mark.
However, some countries are lagging behind others when it comes to adopting cryptocurrency, with Australia offering a relevant case in point. But is the tide beginning to change down under, and what’s the current situation for investors?
Why the Fear of Missing Out (FOMO) is Strong in Australia
Interestingly, it was the Commonwealth Bank of Australia that first broke cover down under, becoming the first of the so-called “big four” banks in the country to offer a range of crypto-based services.
The bank is also poised to support the trading of up to 10 digital assets directly via its banking app, including market leading tokens such as BTC and Ethereum (ETH).
According to Matt Comyn (the CEO of the Commonwealth Bank), the reason behind the move is simple. More specifically, the institution is more concerned about the risks of missing out on cryptocurrency than those supposedly associated with its adoption, with this point-of-view having already prevailed in markets across the globe.
In wider investment terms, this mindset is often referred to as ‘FOMO’, or the fear of missing out. It describes an outlook that considers the potential benefits of an asset class as being more compelling than the associated risks, and the wider, global adoption of crypto tokens like BTC is certainly encouraging many to see the asset in a more favourable light.
Understand the Need for Regulation
Of course, the crypto market in Australia remains incredibly immature, and there may be a temptation for both institutions and investors to jump headlong into the space and attempt to make up any lost ground.
However, this would represent a significant oversight, as the regulatory framework in Australia needs time to develop in line with the nature of cryptocurrency and the rising demand that exists nationwide.
Specific regulations need to be introduced for digital asset miners, including tax discounts and a stringent licensing regime for crypto exchanges. This will enable Australia to build a market that can compete with Singapore, the US and the UK, while effectively safeguarding investors and their assets.
Such measures have been detailed in a comprehensive report published by the Senate’s Committee on Australia as a Technology and Financial Centre, with a clear emphasis on establishing the country as a powerhouse in the fast-growing fintech space.
For now, however, investors in Australia may want to keep their powder dry when it comes to the cryptocurrency market, with a widespread lack of regulation making this something of a jungle at present.
It will offer significant value in the future, however, especially if the government creates a regulatory framework in which traders can operate safely and profitably at all times.