The Turnbull Government has released a statement on its future strategies and priorities, which the start-up industry believes could see Australia become the FinTech Hub of Asia within years.
The Backing Australian FinTech statement is a key part of the Government’s National Innovation Science Agenda and outlines a number of commitments to future reforms that aim to promote commercial risk-taking and, in turn, boost Australia’s FinTech sector. Treasurer Scott Morrison stated that the Federal Government is working closely with their newly-formed FinTech Advisory Group and FinTech Australia to create an environment where FinTech can be internationally competitive and the broader local economy can attract and keep talented entrepreneurs working in Australia.
In late February, the Prime Minister unveiled the FinTech Advisory Group, chaired by Craig Dunn, the chairman of startup incubator Stone & Chalk, director of Westpac Bank, and former CEO of AMP. The Government has worked with the Group and other industry members to develop some key commitments as the foundations of Australia’s FinTech future. Its initial priorities include:
- To create a ‘regulatory sandbox’ for businesses, within which the consequences of failure will be contained to allow innovation to flourish. The government has been working with the Australian Securities and Investments Commission (ASIC) to reduce regulatory barriers to start-up ventures and allow them to deliver financial services to consumers without having to spend their start-up capital on licencing.
- Continue to refine crowdfunding regulations to bring Australia up to par with other leading FinTech markets. This will involve opening up equity crowdfunding to all companies, regardless of assets and turnover, and reducing the cooling off period for investors into crowd-sourced equity-funded projects to just 48 hours.
- Refer progress on Comprehensive Credit Reporting, and the opportunity to create more open access to financial data generally, to the Productivity Commission as part of its inquiry into data
- Issue clear guidance on compliance obligations for ‘Robo-Advisors’ providing automated financial advice. The government is currently working with ASIC to determine necessary updates to existing guidelines.
- To address the ‘double taxation’ of consumers when using bitcoin and other digital currencies to buy anything that is already subject to GST. The government will also review anti-money laundering and counter-terrorism financing rules to address the inability of digital currency operators to secure banking relationships.
- Addressing the ineligibility of many FinTech ventures to receive investment from VC funds registered under the Venture Capital Act.
- The government pledged $30 million to establish an industry-led Cyber Security Growth Centre to expand and strengthen Australia’s cyber security industry.
- The development of funds management passports with China.
The Government’s FinTech Statement also notes the potential of blockchain encryption and distributed ledger technology. While still in its early stages of development, it has the potential to simplify the way in which financial markets operate, with benefits to investors, participants, regulators and government agencies. The government has backed the ASX’s exploration of blockchain technology for a new post-trade solution for the Australian equity market.
Where to from here?
The Backing Australian FinTech statement shows the government’s commitment to working with the FinTech industry to create an environment that promotes and supports innovation and competition for start-up FinTech ventures. This is an important foundation for change and we expect to see some exciting reforms in the near future.