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Australia to Mandate Financial Services Licenses for Crypto Firms
Australian regulators are preparing to come up with new regulations for crypto exchanges in the region to go by. The new rule seeks to ensure that all such firms will be required to hold financial services licenses as part of the country’s efforts to keep a close watch on the fast-growing digital asset market.
As to what prompted this idea, the Australian Securities and Investments Commission (ASIC) confirms that it is worried about the effectiveness of the current regulatory framework in handling the complexities of popular cryptocurrencies like Bitcoin BTC $63 445 24h volatility: 1.1% Market cap: $1.25 T Vol. 24h: $30.51 B and Ether ETH $2 644 24h volatility: 2.4% Market cap: $318.25 B Vol. 24h: $16.35 B . Commissioner Alan Kirkland disclosed this during the AFR Crypto and Digital Assets Summit in Sydney on September 23, 2024.
According to the commissioner, there many widely traded crypto assets already qualify as financial products. So, this makes them subject to the existing Corporations Act. Therefore, it has become necessary that clear guidance and enforcement be put in place.
As a result, it would now be required that crypto exchanges in Australia must bag the financial services licenses. That is, if they intend to continue their operations, according to a report by The Australian Financial Review (AFR).
Kirkland noted that the new regulations are only a means to bring crypto exchanges in line with the financial sector. Moreover, since many of these crypto assets are, in fact, financial products, then the crypto exchanges must obtain the same type of licenses that traditional financial institutions do.
This move, for ASIC, is a way to ensure that the firms stay in line, complying with the established standards for transparency, consumer protection, and anti-money laundering.
Crypto Exchange Regulation Targets Digital Asset Market by November 2024
Per ASIC, it will release updated guidelines under the Corporations Act by November 2024. This new legislation is expected to outline how specific crypto tokens and products will be treated from a legal perspective. It is expected that these changes will provide more regulatory clarity for industry participants.
By and large, the updated legislation may impact a large number of crypto firms operating within the borders of Australia. As a result, such firms would have to adjust accordingly or face dire consequences.
Notably, Australia’s recent move reflects what appears to be a growing trend on the global scene. Regulators around the world have been stepping up their game to curtail the possible excesses of the crypto industry. So, Australia now joins the likes of the United States and the United Kingdom to hold a tighter regulatory grip on their respective crypto markets.
Australia to Mandate Financial Services Licenses for Crypto Firms
