Australian Regulator Developing Outcome-Based Crypto Policies

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Key takeaways:

  • The ASIC will concentrate on the intended regulatory results as it approaches developing and implementing several regulatory reforms for the crypto industry.
  • The ASIC seeks to promote trust in crypto and decentralized financial systems through enhanced oversight and balancing the trilemma variables.

As it approaches developing and implementing several regulatory reforms for the cryptocurrency industry, the Australian Securities and Investments Commission (ASIC) will concentrate on the intended regulatory results.

On March 20, at Blockchain APAC’s Policy Week, Commissioner Alan Kirkland of ASIC presented the organization’s strategy for encouraging the expansion of responsible financial innovation at “The Brief – Open Forum.”

Regarding financial innovations, Kirkland emphasized the necessity of resolving the “regulatory trilemma,” which includes preserving consumer protection, upholding market integrity, and promoting financial innovation.

Through enhanced oversight and balancing the trilemma variables, the ASIC seeks to promote trust in cryptocurrency and decentralized financial systems. According to the commissioner, approximately 900 firms have received informal regulatory help from the ASIC since 2016. Regarding the impending changes, Kirkland stated:

“In short, our desired outcome is a clear set of rules that maintain market integrity and mitigate the risks to consumers and investors – backed by mechanisms that promote compliance with these rules and enable us to enforce them effectively.”

In addition, the ASIC was inundated with suggestions to tokenize other “real world” commodities, such as financial goods. Kirkland also mentioned:

“Some types of tokenization will be regulated through the current regulatory regime, while others will be regulated through the Government’s digital asset platform proposal,”

Kirkland thinks that ASIC’s innovative approach and sensible regulation can lessen the hazards involved and aid in the public promotion of digital assets.

In a consultation paper published in October 2023, the Department of the Treasury suggested requiring cryptocurrency exchanges to submit an application for a financial services license from the regional financial authority.

According to the proposed new regulations, any cryptocurrency exchange that holds more than AU$1,500 ($946) or more than 5 million Australian dollars ($3.2 million) per individual must apply for an ASIC license.

Australian cryptocurrency exchanges responded to the plan with varying degrees of agreement, but the Treasury clarified that the purpose of the consultation document is to “seek feedback” on the several questions and laws that are included in it.

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