The Australian government has unveiled its proposal to regulate cryptocurrency exchanges and digital asset platforms under existing financial services laws.
The core theme of the new regulatory framework is to regulate service providers and platforms rather than individual cryptocurrencies or tokens. Under the proposed rules, any crypto exchange holding more than $3.2 million AUD (approximately $2.4 million USD) or more than $1,500 AUD (approximately $946 USD) per individual must obtain a license from the Australian Securities and Investment Commission (ASIC).
Jim Chalmers, the treasurer, revealed that approximately one-fourth of the Australians has some form of cryptocurrency. He added that cryptocurrency platforms will need to adhere to current financial services laws, sidestepping the need for brand-new crypto-centric regulations. The consultation document underlines the vast sums of money managed by online platforms, which could pose considerable risks to Australian investors.
“Collapses of digital asset platforms, both locally and globally, have seen Australians lose their assets or be forced to wait their turn amongst long lines of creditors. These reforms seek to reduce the risk of these collapses happening, by lifting the standard of their operations and increasing their oversight,” said Jim Chalmers.
The country anticipates introducing draft legislation delineating licensing and custody regulations for crypto asset providers by 2024. Once sanctioned, exchanges will be accorded a 12-month window to align with this new regulatory setting. Given this trajectory, the earliest an Australian digital asset platform might secure a license under the proposed rules would be 2025.
Despite initial expectations for this proposal to be unveiled by mid-2023 (following its initial announcement in February 2023), the unveiling only took place in October. This consultation paper operates independently of a prior one focusing on token mapping – the procedure of pinpointing primary operations and roles of crypto products and aligning them with extant regulatory guidelines.
The regulatory proposal comes shortly after a broader crackdown by major banks on crypto firms as they allegedly grapple with the scammed funds being funneled into cryptocurrencies, making it challenging to recover for victims. The regulatory pressure and controversy surrounding Binance have further intensified the scrutiny.
Australia’s largest bank, the Commonwealth Bank of Australia (CBA), also introduced similar anti-scam measures in June that include blocking certain payments to specific cryptocurrency exchanges. As part of these measures, the bank now holds specific payments to crypto exchanges for a period of 24 hours. Furthermore, the CBA plans to apply a monthly transfer limit of A$10,000 (US$6,666) to crypto exchanges.
