In a recent report published by Bloomberg, Australia is on foot to demand cryptocurrency exchanges to obtain financial services licenses from the market regulator, aiming to foster the growth of digital assets while safeguarding consumers. Exchanges holding over A$5 million ($3.2 million) will need permits from the Australian Securities and Investments Commission (ASIC).
The new rules, inspired by UK, Canada, and Singapore frameworks, will also include custody and transaction standards. This move aligns with global efforts to regulate digital assets following last year’s $1.5 trillion crypto downturn, which exposed risky practices and led to the downfall of major trading venues. Recently, Hong Kong has also initiated stern action on unregulated exchanges, and many exchanges are facing fraud claims from users like JPEX.
Tracing the Crypto Regulation Bloodline
In a recent revolutionary move, the UK, Canada, and Singapore are strengthening crypto regulations, encompassing activities like trading, lending, and custody under frameworks akin to traditional financial services. Singapore fosters productive blockchain applications while curbing retail investor participation in crypto-related trading.
Australia plans to consult on these regulations until December 1, with draft legislation expected next year, followed by a 12-month adjustment period for exchanges to comply. The requirements draw from existing financial services laws covering financial record submission and market misconduct monitoring.
Australia’s Call for Security
Interestingly, this move comes as Australian banks have recently restricted access to digital asset platforms due to concerns about scams. ASIC has also investigated Binance Australia’s now-defunct local derivatives business. The ASIC chairman is more determined that the crypto industry should be held to the same high standards as other sectors.
“Crypto must be held accountable to the same high standards we expect of everyone else.” Said ASIC Chairman Joe Longo.
Meanwhile, the Reserve Bank of Australia is exploring how various digital money and infrastructure forms can support tokenized asset market development, potentially leading to substantial cost savings in local financial markets.
A Mixed Bag of Reaction?
The Australian government’s proposal to require crypto exchanges to obtain financial services licenses has garnered mixed reactions. Swyftx’s general counsel sees it as a “thoughtful” move to ensure user access with proper safeguards.
On the other hand, Kraken Australia’s Director views it as an attempt to fit crypto into existing financial regulation, expressing disappointment in the approach; like the USA, other countries are also facing a crypto regulation challenge, and if the US brings uniform crypto rules, it will open the floodgate of new adoptions globally.