Australia Mulls Over Requiring Cryptocurrency Exchanges to Hold Financial Services License
Summary:
The Australian government is considering enforcing cryptocurrency exchanges to secure a financial services license from the national financial regulator, ASIC. A new consultation paper from the Australian Treasury revealed that the regulatory framework targets exchanges and service providers, not individual cryptocurrencies. The paper has sparked responses from top industry figures, expressing some disappointment with the potential regulation's approach and emphasizing the need for collaboration and proper understanding of the crypto industry.
The national government of Australia is considering the implementation of a mandate which necessitates cryptocurrency exchanges to secure a financial services license from the national financial watchdog, the Australian Securities and Investments Commission (ASIC). As stipulated in the "Regulating digital asset platforms" consultation document, introduced on October 16 by the Australian Treasury, the new regulatory structure aims both to protect consumers from harm and promote innovation in the arena of digital assets.
The focus of this new regulatory initiative is on the regulation of cryptocurrency exchanges and service providers, rather than on individual cryptocurrencies or tokens. Furthermore, the document details that regulation of these exchanges will fall under the purview of existing financial services laws, rather than necessitating the creation of new, crypto-specific legislation.
Kraken Australia's Director, Jonathon Miller has expressed his dissatisfaction with these latest developments, describing the consultation document's approach as an attempt to fit cryptocurrency into the existing framework of financial services regulation. "We're lagging behind our counterparts globally in terms of implementing a crypto-framework, so I understand the need for some locally-based guidelines to provide certainty to platforms such as ours," said Miller. He expressed concern, however, that this approach could overlook the specialized nature of the technology.
Miller went on to express hope for a collaborative relationship with the government in order to prevent the stifling of future innovations in cryptocurrency that may not fit into the traditional definition of ‘financial services’.
Meanwhile, Liam Hennessey, a partner at the international law firm Clyde & Co, remarked that although it's evident that the Treasury is still wrapping its head around the diverse types of tokens and service providers, it's important to remember that all the proposed ideas in the consultation paper remain as suggestions and are not yet legally binding.
Hennessey further commented that the consultation paper arguably does not address some of the more immediate issues that the crypto industry in Australia is grappling with, such as the recent spate of de-banking. Hennessey expressed concern about the struggle many licensed digital assets exchanges, both domestic and international, are facing in securing adequate banking arrangements.
This story is still unfolding and additional information will be provided as it emerges.
Published At
10/15/2023 10:31:17 PM
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