Australia is taking a major step towards regulating the cryptocurrency industry by proposing a new licensing regime for crypto exchanges. The initiative, introduced by Australia’s Treasury, aims to enhance consumer protection, bring clarity to the digital asset sector, and align the country with global regulatory standards.
Under the proposed framework, cryptocurrency exchanges operating in Australia will need to obtain an Australian Financial Services License (AFSL) from the Australian Securities and Investments Commission (ASIC). This requirement will apply to exchanges that hold more than AUD 1,500 of any single client’s assets or have total assets exceeding AUD 5 million. The goal is to ensure that exchanges can protect their customers’ interests and comply with strong financial and operational standards.
The Treasury plans to release draft legislation covering licensing and custody rules for crypto asset providers by 2024. Once enacted into law, crypto exchanges will have a 12-month transition period to align their operations with the new regulatory framework. This means that it may not be until 2025 before an Australian digital asset platform can obtain a license under this new regime.
The proposed regulatory framework is consumer-centric, aiming to strike a balance between consumer protection and innovation. Recognizing that the digital asset landscape is rapidly evolving, the framework aims to provide clear guidelines to industry participants.
To ensure a well-informed and balanced approach, the government has initiated a consultation process and welcomes feedback from industry stakeholders and the public. The proposal includes 32 key themes and invites written submissions by December 1, 2023. This inclusive approach demonstrates the government’s commitment to involving all relevant stakeholders in shaping the final regulations.
In addition to regulating crypto exchanges, Australia is also actively exploring central bank digital currency (CBDC) research. The Reserve Bank of Australia and the Treasury will publish a joint report in 2024, offering insights into CBDC research within the country and outlining a roadmap for future work. This coordinated effort reflects Australia’s commitment to exploring the possibilities and implications of digital currencies.
The proposed regulatory regime in Australia highlights the country’s dedication to regulating the crypto industry in a way that balances protection and innovation. As the consultation process unfolds, Australia is poised to join its international peers in establishing a framework that addresses the unique challenges of the digital asset space while safeguarding consumer interests.