Australia Introduces Enhanced Regulatory Framework for Cryptocurrency Exchanges

Australia to Introduce Stricter Regulations for Crypto Exchanges

Australia’s federal government is pushing ahead with plans to implement tighter regulations for cryptocurrency exchanges. The Australian Treasury has released a consultation paper stating that exchanges will need to apply for a financial services license. The Treasury expects to release draft legislation discussing licensing and custody regulations for crypto asset providers by 2024, with exchanges given 12 months to comply once the bill becomes law.

Financial Services Licenses Could Take Until 2025

The consultation paper reveals that crypto exchanges will need to apply for financial services licenses from local financial regulators. However, it could take until 2025 for exchanges to receive these licenses under the proposed legislation’s timeline. The government aims to introduce a regulatory framework that addresses consumer risks while supporting innovation in the crypto ecosystem.

Australia Focuses on Regulating Exchanges and Providers, Not Tokens

The proposed regulation aims to regulate cryptocurrency exchanges and service providers rather than individual tokens or assets. It plans to do so by applying current financial service laws rather than creating specific rules for the crypto industry. Exchanges holding over $3.2 million or more than $946 per individual will be required to obtain a financial services license from the Australian Securities and Investment Commission (ASIC).

Hot Take: Australia Takes Steps Towards Crypto Regulation

Australia’s move towards introducing stricter regulations for cryptocurrency exchanges demonstrates the government’s commitment to consumer protection while fostering innovation in the digital asset sector. By requiring exchanges to apply for financial services licenses, the government aims to ensure consistent oversight and safeguards for consumers. While this may create additional compliance requirements for exchanges, it ultimately contributes to the long-term stability and legitimacy of the crypto industry in Australia.