Australia needs to introduce new regulations for digital asset miners, such as tax discounts and a licensing regime for crypto exchanges, to be “competitive with Singapore, the UK and the U.S.”, a Senate report said.

The report, published by the Senate’s Committee on Australia as a Technology and Financial Centre on Wednesday, also calls for clarity on rules about when banks can refuse to deal with a business customer involved in cryptocurrency.

Many of Australia’s top financial institutions have not engaged with the cryptocurrency sector, despite its huge growth in the past year, due to its high risks.

Australia needs to fix its regulations in order for entities to have a decentralised and autonomous structure. It also must reform its tax laws so that people can only trade digital assets when there is a clearly defined capital gain.

Andrew Bragg (chair of committee) stated that this means Australians have more control over their financial future than being dependent on inexorable intermediation.

“The committee has recommended a comprehensive crypto framework to deliver Australian leadership. He said that we will be competitive with Singapore and the UK, as well as the U.S.

Australia has struggled to keep pace with the growth in digital asset economy, which covers crypto exchanges, blockchain-based security tokens and non-fungible tokens, or “NFTs”, which offer ownership of online properties.

The Australian Taxation Office has noted a “dramatic increase in trading” since early 2020 when Covid-19 lockdowns sparked a flurry of online investment activity, the report said, sending prices of some cryptocurrencies to record levels.

The market size for Australian digital assets is not known. However, there are different estimates. A sixth of Australians owned cryptocurrency in 2021 worth A$8 billion ($6 billion), with bitcoin the most popular, researcher finder.com.au says.

The report was welcomed by digital market participants, who however cautioned against a faster change of rules.

It contains strong recommendations, but (but) speed at which regulations are being implemented, and speed with which this technology changes, are two poles apart,” said Mark Carnegie who is a venture capitalist.

Caroline Bowler is the CEO of BTC Markets bitcoin exchange. She said that the report exceeded expectations because it included “pragmatic suggestions… to put Australia on the international fintech map.”