Key takeaways:
- The Australian government is moving quickly to regulate the exchange-level market, and it may soon mandate that crypto exchanges get a financial services license.
- The main goal of the new regulatory framework is to control bitcoin service providers and exchanges rather than the actual coins or tokens.
The Australian federal government is moving quickly to regulate the exchange-level market for digital assets, and it may soon mandate that cryptocurrency exchanges get a financial services license from the regional financial authority.
The Australian Treasury stated in the recently released “Regulating Digital Asset Platforms” consultation paper that the goal of the new regulatory framework is to protect consumers from harm while fostering innovation in the digital asset market. The document was unveiled on October 16.
The main goal of the new regulatory framework is to control bitcoin service providers and exchanges rather than the actual coins or tokens.
Furthermore, the consultation paper clarified that rather than creating new regulations unique to cryptocurrencies, it will regulate cryptocurrency exchanges in accordance with already-existing financial services laws.
Any cryptocurrency exchange that holds more than $3.2 million, or more than $946 per person, will need to apply for a license from the Australian Securities and Investment Commission (ASIC) under the proposed new regulations.
Australian cryptocurrency exchanges have expressed differing opinions about the plan.
General Counsel Adam Percy of Australian cryptocurrency exchange Swyftx referred to the suggestion as “thoughtful” and concurred that there should be room for innovation and that the main goal should be to guarantee that cryptocurrency users may use blockchain technology with the necessary protections.
The director of Kraken Australia, Jonathan Miller, expressed his dissatisfaction with the recent events, claiming that the consultation paper was effectively “shoehorning” cryptocurrency into the framework of already-existing financial services law.
According to Miller, Australia is currently in an unfortunate circumstance where regulation has been slow to move, so we’re adopting a strategy of shoehorning cryptocurrency into the already-existing financial services regulation. Miller stated:
“We’re behind our global peers when it comes to implementing a crypto framework, so I appreciate the need to have something in place locally to provide certainty to platforms like ours.”
Interestingly, the Treasury stated that the goal of the consultation document is to “seek feedback” on the several topics and rules that are presented within it. Any feedback can be submitted until December 1, 2023.
