Australia to Require Crypto Exchanges to Obtain Financial Services Licenses
Australia is set to demand that cryptocurrency exchanges obtain financial services licenses from the market regulator in order to foster the growth of digital assets and protect 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 frameworks in the UK, Canada, and Singapore, will also include custody and transaction standards. This move aligns with global efforts to regulate digital assets following last year’s crypto downturn. Hong Kong has also taken action on unregulated exchanges, and many exchanges are facing fraud claims from users.
Tracing the Crypto Regulation Bloodline
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. There will be 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
Australian banks have recently restricted access to digital asset platforms due to concerns about scams. ASIC has investigated Binance Australia’s now-defunct local derivatives business. The ASIC chairman believes the crypto industry should be held to high standards like other sectors. Meanwhile, the Reserve Bank of Australia is exploring how different forms of digital money can support tokenized asset market development.
A Mixed Bag of Reaction?
The Australian government’s proposal has received 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 and expresses disappointment in the approach. Other countries, like the US, are also facing crypto regulation challenges.
Hot Take: Australia Takes Steps Towards Crypto Regulation
Australia is joining other countries in strengthening regulations for the cryptocurrency industry. By requiring exchanges to obtain financial services licenses, the Australian government aims to protect consumers and promote the growth of digital assets. This move aligns with global efforts to regulate the industry following last year’s crypto downturn. While some see this as a thoughtful approach, others believe it may hinder innovation in the sector. Regardless, it is clear that regulators are taking steps to hold the crypto industry accountable and ensure its compliance with existing financial standards.
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