Australia’s new government, led by Prime Minister Anthony Albanese, is laying the foundations for crypto regulation. The country may soon require exchanges to apply for a financial services license granted by the market regulator.
Australian digital assets providers face a new licensing regime
On October 16, Australia’s Treasury released a consultation paper, titled “Regulating digital asset platforms”—and said the Australian federal government is looking to introduce a draft legislation for digital assets providers as soon as next year.
As per the proposed rules, crypto exchanges holding more than AUD 1,500 ($946) for a client or exceeding AUS 5 million ($3.15 million) in total assets will be required to get an Australian Financial Services license from the Australian Securities and Investments Commission. Once the proposed legislation becomes law, Australian exchanges will have 12 months to comply.
Australia’s newly proposed regulatory framework for crypto assets providers should not be confused with the token mapping consultation paper, introduced earlier this year. Token mapping involves the identification of primary activities and functions of crypto products and mapping them against existing regulatory frameworks. Furthermore, Australia’s Treasury has clarified that the government seeks to regulate crypto exchanges under the existing financial rules—rather than establishing crypto-focused rules.
No doubt, the Australian federal government has taken a significant step towards crypto regulation, but it’s worth noting that the consultation paper outlines only suggestions to regulate the space and is not legally binding. Australia’s Treasury has solicited feedback and stakeholders have until December 1, 2023, to submit their responses.
Additionally, the Treasury and Reserve Bank of Australia are set to release a joint report in mid-2024 “that will provide a stocktake on central bank digital currency (CBDC) research in Australia and set out a roadmap for future work,” according to Dr. Brad Jones, Assistant Governor (Financial System) at Reserve Bank of Australia. This follows a prior decision to hold off on a CBDC due to unresolved pilot project issues.
Local crypto exchanges demand a “level playing field”
So far, the reaction to the move has been a mixed bag. “The approach is consumer-protection centric, with a broad net set to capture many business models not currently regulated. NFT marketplaces holding customer assets could also require licensing,” said Michael Bacina, digital asset lawyer at Piper Alderman and Chair of Blockchain Australia. Meanwhile, Australia-based crypto exchange Swftx says it wants “a level playing field” for homegrown and foreign crypto platforms.
Crypto regulations around the world
Notably, Australia is far behind its peers when it comes to establishing a regulatory framework for crypto. In June this year, the UK passed the Financial Services and Markets Bill, bringing crypto assets and stablecoins under the purview of the country’s financial regime. Countries like Thailand and Canada already have a framework for crypto regulation in place.
Last week, California’s governor gave his blessing to the game-changing “Digital Financial Assets Law”, set to to come into force in 2025.
How the proposed rules shake out will have major implications for the future of crypto in Australia. With draft laws for crypto assets providers now in the works, Australia has signaled that it is committed to protecting consumers from crypto-related risks while also promoting innovation in the digital assets market.
