In a bid to better crypto adoption, Australia seeks to release draft legislation for 2024 that covers licensing for digital assets. More importantly, the Australian crypto exchanges support the Australian Treasury’s recent proposal. The crypto exchanges will be under the financial service license regime, and if approved, the exchanges will have 1 year to transition.
Simply put, the crypto exchanges in the country look to regulate cryptocurrencies within the frameworks of pre-existing measures on financial service licensing. One downside that could worry crypto investors is if the measure could lead the cryptocurrency industry in a TradFi-shaped box.
Australia seeking new crypto licensing regime
According to the the coutry’s Treasury announcement on Monday, the crypto exchanges look to involve the existing financial service licensing regime. This has shown Australia’s effort towards crypto adoption and crypto farming regulations. The proposal has been in the works since February 2023, and implementation was expected by mid-year 2023.
However, if approved, according to the Treasury announcement, it could take a timeline till 2025. It would take that long for any Australian crypto platform to receive a license under the new regime.
The Australian Treasury outlined in the consultation paper on October 16th spelling out the proposed regulations. Apart from incorporating the already existing financial service rules, it also seeks to outline a pool of new regulations and guidelines for Australian crypto exchange firms.
The proposal aligned with Steve Jones’ speech at The Australian Financial Review Crypto Summit (AFRCM). According to the country’s Assistant Treasurer and Minister for Financial Services, Stephen Jones, the new regime targets three specific areas.
They include, first, providing a framework for crypto industrial development through innovations. The Second was to create certainty on passed regulations and implement them to crypto service providers. Thirdly, it was to protect investor assets and ensure they remain secure.
The proposal suggested that all crypto exchanges holding more than AUD 1,500 ($948.7) of one or more clients would require the Australian Financial Service License. This also applies to crypto exchanges holding more than AUD 5 million ($3.162 million). The license would be granted by the Australian Securities and Investments Commission.
Reviews on the new licensing regime
According to a General counsel leader to a local crypto exchange in Australia, Adam Percy of Swyftx crypto firm, he approved of the Government’s consultation, deeming it as thoughtful. In his words:
Swyftx would like to see a level playing field for national and overseas crypto platforms. The Government consultation is thoughtful […] with appropriate protections and […] room for innovation.
Adam Percy
Moreover, the Australian Reserve Bank and the Treasury will be required to provide a joint report detailing the stocktake on central bank digital currency (CBDC). The other reason for the rounded report is to create a roadmap for future cryptocurrency development frameworks.
Regardless of the proceedings and their positive effect on the Australian digital currency market, it is possible that the industry might be stuffed into a TradeFi-shaped box. According to Managing Director of Kraken Australia, Jonathan Miller, he shared his reviews on the proposed regime. Miller commented:
Australia is now in the unfortunate situation where our regulation has taken a very long time, so we’re taking the approach of shoehorning crypto into existing financial services regulation.
Jonathan Miller
His thoughts on the matter were clear as he confirmed that the consultation paper was a step in the right direction as it provided much-needed transparency. The regulations intend to ascertain protection and effective servicing from crypto firms in Australia.
Another sentiment made by Liam Hennessy, a partner at Clyde & Co, an international consultation law firm, approved of the consultation paper and says it would mean great things for the crypto industry in the country.
