One in four Australians have invested in cryptocurrencies. So, it is only fitting that the Australian federal government is planning to regulate crypto assets providers.
Australia’s push for crypto regulation
Todayq News reported earlier in the day that the Australian Treasury has released a consultation paper—proposing that crypto exchanges be regulated under existing financial services licensing measures. Once the legislation is enacted into law, crypto assets providers with more than AUD 5 million ($3.2 million) in total assets will be required to obtain a license from the Australian Securities and Investments Commission, Australia’s market regulator.
According to Stephen Jones, Assistant at Australia’s Treasury, by introducing a new licensing regime for crypto exchanges, the government wants to support the growth of digital assets and provide regulatory certainty to crypto exchanges. At the same time, it also seeks to protect consumers from scammers plaguing the digital assets sector.
Australian digital asset providers are, however, on tenterhooks following the Treasury’s announcement, with some crypto exchanges hailing the move, while others voicing concerns that it could drive crypto businesses overseas and stifle innovation.
Industry leaders weigh in on proposed legislation
Caroline Bowler, the CEO of BTC Markets, described Australia’s proposed legislation for crypto exchanges as a “key milestone.”
“It’s a great next step for the Australian economy. Digital assets are so clearly the future of financial services. It is imperative that the country keeps pace with our international peers with a robust regulatory framework.”Caroline Bowler, CEO, BTC Markets
Adrian Przelozny, CEO of Independent Reserve, also hailed the proposed regulatory framework, expressing hope that it could help build trust in the crypto space—which is facing increasing scrutiny around the world due to deceptive practices by several high-profile crypto exchanges. A boom in crypto scams has only made matters worse.
Meanwhile, Liam Hennessy, a partner at Clyde & Co, pointed out that the new rules would enable Australia to catch up to other jurisdictions like the European Union, which released its second consultation paper on the Market in Crypto Assets (MiCA) regulations.
However, Jonathan Miller, managing director at Kraken Australia, has expressed apprehension about the new rules, saying “Australia is now in the unfortunate situation where our regulation has taken a very long time, so we’re taking the approach of shoehorning crypto into existing financial services regulation.”
Will the move help Australia catch up to other countries that have regulated crypto?
That said, Miller has acknowledged that Australia’s recent proposal comes at an opportune moment and is necessary to provide much-needed regulatory clarity for crypto exchanges operating in the country.
“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.”Jonathan Miller, MD, Kraken Australia
While cryptocurrencies are witnessing a rise in their adoption rates across the world, a lack of regulatory certainty in most countries has thwarted innovation in the Web3 industry. Moreover, it has created a trust deficit in the crypto market, with regulators around the world cracking down on the industry.
Notably, Australia is not the only country to propose rules to regulate crypto companies. In fact, countries like France and the United Kingdom have made great strides when it comes to regulating entities dealing in digital assets. While Australia may be late to join the crypto regulation party, it has still come up with a significant proposal for how the country might build guardrails around the digital assets sector.