The Australian federal government is forging ahead with plans to introduce regulations in the digital asset sector, particularly focusing on cryptocurrency exchanges.
It may soon mandate that cryptocurrency exchanges acquire a financial services license issued by the local financial regulator, according to the recently unveiled “Regulating digital asset platforms” consultation paper released on October 16.
This regulatory framework aims to balance consumer protection with fostering innovation in the digital asset sector.
The central theme of this framework is the regulation of cryptocurrency exchanges and service providers rather than individual cryptocurrencies or tokens.
Notably, it intends to regulate crypto exchanges under existing financial services laws rather than creating new crypto-specific regulations.
Under these proposed rules, any crypto exchange holding more than $3.2 million ($5 million AUD) or more than $946 ($1,500 AUD) per individual would be required to obtain a license from the Australian Securities and Investment Commission (ASIC).
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Reactions to this proposal among crypto exchanges in Australia have been mixed. Swyftx’s general counsel, Adam Percy, welcomed the proposal as “thoughtful,” emphasizing the importance of ensuring appropriate protection for cryptocurrency users and promoting innovation.
On the other hand, Jonathon Miller, director of Kraken Australia, expressed disappointment, describing the consultation paper as an attempt to fit crypto into existing financial services regulations, indicating that Australia lags behind global peers in implementing a comprehensive crypto framework.
Liam Hennessy, a partner at international law firm Clyde & Co, noted that the Treasury’s consultation paper is only a set of suggestions and not legally binding recommendations.
He emphasized the need for the government to address more pressing issues facing the crypto industry in Australia, such as challenges related to banking arrangements for licensed digital asset exchanges.
The Treasury’s objective with the consultation paper is to gather feedback on the proposed regulations and questions outlined within it.
They have invited stakeholders to provide their input, with the deadline for submissions set for December 1, 2023.
While the crypto industry in Australia grapples with evolving regulations, the government aims to strike a balance between safeguarding consumers and fostering innovation in this rapidly growing sector.
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