- New Australian regulations will require crypto exchanges to hold financial services licenses
- The ASIC aims to enhance oversight and consumer protection in the growing digital asset market
- Many widely traded crypto assets qualify as financial products under existing laws
Following a broader drive by its regulators to increase oversight of the fast-changing digital asset marketplace, crypto exchanges are set to face new regulations.
Under the proposed rules, all crypto firms will be required to obtain financial services licenses, ensuring that these firms operate within a sound regulatory regime.
Australia Crypto Regulation
This comes from the Australian Securities and Investments Commission, which has voiced concerns that the current regulatory setting is not able to deal with the sophistication brought about by popular cryptocurrencies such as Bitcoin and Ether.
These concerns were raised in a speech by Commissioner Alan Kirkland at the AFR Crypto and Digital Assets Summit in Sydney on September 23, 2024.
Kirkland said that many of the widely traded cryptocurrencies already meet the product definition under the current Corporations Act.
“This brings the digital assets into the current regulatory regime and reinforces a clear need for more specific guidance on how this is to be applied and what, if any, additional powers are needed by regulators to effectively monitor and enforce compliance.“
With new regulations, crypto exchanges will be compelled to take a license for financial services if they want to continue the same activities within state borders. This move has been aimed at bringing crypto firms into a position able to match up with regulatory standards imposed on conventional financial institutions in respect of transparency, consumer protection, and anti-money laundering laws.
Conclusions
ASIC’s approach is to make the crypto sector subject to established regulatory frameworks, given that this will further a more trustworthy and stable development of this emergent digital asset market. They further believe that forcing crypto exchanges into holding financial services licenses would make the game safer for both consumers and investors.
These are major moves toward the incorporation of digital assets into the mainstream financial ecosystem as Australia continues to work out its regulatory framework to keep up with the rapidly growing crypto industry.
