The Australian Treasury has initiated steps to impose regulations on cryptocurrency exchanges while avoiding direct regulation of individual digital tokens, in a consultation paper titled “Regulating Digital Asset Platforms,” released on October 16, the Treasury delineated plans requiring crypto exchanges to acquire a financial services license from the local financial regulatory body.
The proposed regulatory framework is crafted to mitigate consumer risks and promote innovation, focusing on the exchanges and service providers rather than the cryptocurrencies themselves. Existing financial services laws will be extended to encompass crypto exchanges, eschewing the creation of new, crypto-specific legislation.
Under the proposed framework, crypto exchanges with holdings exceeding $3.2 million or $946 per individual will be mandated to secure a license from the Australian Securities and Investment Commission (ASIC).
The proposal has elicited diverse reactions from stakeholders in the Australian crypto sector. Adam Percy, the general counsel at Swyftx, an Australian crypto exchange, lauded the proposition as “thoughtful.” He expressed agreement with the initiative’s objective of ensuring that users have secure access to blockchain technology while fostering innovation.
In contrast, Jonathon Miller, Director of Kraken Australia, expressed disappointment, critiquing the government for hastily integrating crypto into the pre-existing financial services regulatory framework. Miller highlighted Australia’s lag behind global counterparts in establishing a concrete crypto regulatory framework.
Liam Hennessy, a partner at international law firm Clyde & Co, underscored that the proposals remain suggestions and are not yet legally binding. He anticipates lobbying efforts following the consultation paper’s release, and noted the paper’s omission of critical issues like the ongoing de-banking challenges facing crypto exchanges in the country.
The Treasury’s consultation paper, inviting feedback until December 1, 2023, marks a significant stride in Australia’s journey to establishing a concrete regulatory framework for the burgeoning crypto sector. While it underscores the government’s attempt to strike a balance between innovation and consumer protection, the diversity in reception indicates a complex road ahead in achieving consensus among stakeholders.