Australia’s federal government is moving forward with its plans to introduce tighter regulation for cryptocurrency exchanges. According to a newly released consultation paper, the Australian Treasury will require exchanges to apply for a financial services license.
On Monday, Australia’s Treasury announced it expects to release draft legislation discussing licensing and custody regulations for crypto asset providers by 2024. It further stated that cryptocurrency exchanges will have 12 months to comply with its new framework once the proposed bill becomes law.
Financial Services Licenses Could Only Be Issued by 2025
According to the Treasury’s consultation paper, crypto exchanges must apply for financial services licenses from local financial regulators. Under the draft legislation’s timeline, it could take until 2025 for exchanges to receive licenses in accordance with its newly proposed legislation.
In its introduction to the proposed regulation, regulators said:
“The government intends to introduce a regulatory framework to address consumer harms in the crypto ecosystem while supporting innovation.
The introduction of a regulatory framework for entities providing access to digital assets and holding them for Australians and Australian businesses is an important step in the government’s approach to crypto reform in the Australian context.”
It further stated that the proposed regulation is aimed at digital asset platforms that present risks similar to institutions operating in the traditional financial sectors. The Treasury assured Australians the draft regulation intends to protect consumers against the risks involved in the digital asset sector.
“The proposed regulatory framework would apply to digital asset platforms that present similar risks to entities that operate in the traditional financial system. It proposes to leverage the Australian financial services framework to regulate digital asset platforms to ensure consistent oversight and safeguards for consumers.”
Australians have until December 1, 2023, to respond to Treasury’s consultation paper.
Australia Aims to Regulate Crypto Exchanges and Providers, Not Individual Tokens
The proposal was first announced in February but has been delayed until now. After a series of delays, the Committee of Economic Legislation rejected the draft regulation in September.
Under the long-awaited proposal, the aim is to regulate cryptocurrency exchanges and service providers rather than individual crypto assets or tokens. The proposed regulation further explained it would regulate crypto exchanges under current financial service laws rather than creating crypto-specific rules.
The draft legislation specifies crypto exchanges holding an amount in excess of $3.2 million or more than $946 per individual must obtain a financial services license from the Australian Securities and Investment Commission (ASIC).
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
