The Australian federal government is surging ahead with plans to enact regulations in the digital asset sector, focusing primarily on cryptocurrency exchanges. In a move that could significantly impact the crypto industry Down Under, it’s now likely that cryptocurrency exchanges will be required to obtain a financial services license issued by the local financial regulator.
A recently revealed “Regulating digital asset platforms” consultation paper from the Australian Treasury outlines this new regulatory framework. It’s designed to tackle consumer protection concerns while still supporting innovation within the digital asset sector. The key aspect of this framework is its focus on regulating the operations of cryptocurrency exchanges and service providers, rather than individual cryptocurrencies or tokens. Additionally, it’s important to note that these regulations would be enforced under the existing financial services laws, negating the need to create a new set of rules specific to cryptocurrencies.
The proposed rules stipulate that any cryptocurrency exchange holding assets worth more than $3.2 million AUD or facilitating transactions exceeding $946 AUD per individual would need to secure a license from the Australian Securities and Investment Commission (ASIC).
![Australian Treasury Takes Step Towards Crypto Regulation image 87](https://i0.wp.com/nosisnews.com/wp-content/uploads/2023/10/image-87.png?resize=977%2C860&ssl=1)
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The reaction to this proposal from the cryptocurrency exchange community in Australia has been mixed. Adam Percy, the general counsel of Swyftx, one of Australia’s prominent crypto exchanges, welcomed the proposal as “thoughtful.” He emphasized the importance of providing crypto users with a secure environment while also encouraging innovation.
However, Jonathon Miller, director of Kraken Australia, expressed disappointment with this approach, characterizing the consultation paper as an attempt to fit cryptocurrencies into existing financial services regulations. He acknowledged the need to establish local regulatory measures for cryptocurrencies but hopes that a collaborative approach with the government would preserve room for innovative crypto solutions that don’t conform to conventional financial service norms.
Liam Hennessy, a partner at international law firm Clyde & Co, pointed out that the Treasury’s proposals in the consultation paper are just suggestions and not legally binding recommendations. The government will take into account feedback and engage in lobbying as the regulatory process advances. Hennessy also highlighted that the consultation paper might not adequately address urgent issues faced by the Australian crypto industry, such as challenges related to securing adequate banking services for licensed digital asset exchanges, both domestic and international.
The Treasury has made it clear that the purpose of the consultation paper is to seek feedback on the proposed regulations and questions within it. Stakeholders have until December 1st, 2023, to submit their feedback, shaping the future of cryptocurrency regulations in Australia.
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