The Australian government has recently proposed a new regulatory framework that will require cryptocurrency exchanges to hold a financial-services license. This proposal builds on existing laws and is aimed at digital-asset platforms that hold more than A$5 million ($3.2 million), or A$1,500 for an individual. These platforms will need to obtain a permit from the Australian Securities and Investments Commission (ASIC).
Australia’s Treasurer, Jim Chalmers, announced this plan with the aim of protecting those who own digital assets in the country. The Australian Treasury released a consultation paper on cryptocurrencies, stating that crypto exchanges will be required to apply for a financial services license.
Regulation that supports innovation
The new regulatory framework aims to address consumer harms while still supporting innovation in the digital asset sector. The core theme of this framework is to regulate cryptocurrency exchanges and service providers instead of individual cryptocurrencies or tokens themselves.
Jonathon Miller, the Director of Kraken Australia, expressed his disappointment at the latest developments, saying that the consultation paper was essentially “shoehorning” crypto into existing financial services regulation.
Draft expected next year
Liam Hennessey, partner at international law firm Clyde & Co, said that while it’s clear that the Treasury is still “grappling” with all of the different types of tokens and service providers, it’s crucial to remember that all new proposals set out in the consultation paper are still only suggestions, and are not legally binding recommendations.
The Australian government will consult on its plans until Dec. 1. Draft legislation is expected next year, followed by a period of 12 months to allow exchanges to ensure they are compliant with the new rules. The obligations for firms are drawn from existing law for financial services, including submitting financial records, monitoring market misconduct and meeting solvency and cash reserve requirements.
Integrating cryptocurrencies into Australia’s financial system
This marks “a positive progression for the crypto industry,” Caroline Bowler, chief executive officer at crypto platform BTC Markets Pty, said in a statement. “It is imperative the country keeps pace with our international peers, with a robust regulatory framework”.
In conclusion, these new regulations represent a significant step towards integrating cryptocurrencies into Australia’s financial system. While some industry figures have expressed concerns about these changes, others see them as a necessary step towards ensuring consumer protection and fostering innovation in the digital asset sector.