Australian regulators are reportedly preparing new guidance that will require cryptocurrency exchanges to obtain financial services licenses. This move aims to extend licensing requirements beyond the current regulations governing digital currency exchanges, according to a report by The Australian Financial Review (AFR).
New Licensing Requirements for Crypto Exchanges
Alan Kirkland, a commissioner with the Australian Securities and Investments Commission (ASIC), emphasized that the updated requirements are necessary because the regulator believes that the Corporations Act encompasses most major crypto assets, including Bitcoin and Ether.
Kirkland announced these plans during his address at the AFR Crypto and Digital Assets Summit in Sydney on September 23.
ASIC is preparing to revise the Corporations Act’s Information Sheet 225, aiming to provide clearer guidelines on how specific crypto tokens and related products should be treated from a regulatory standpoint.
“ASIC’s message is that a significant number of crypto-asset firms in the Australian market are likely to need a license under the current law,” Kirkland stated in a communication with Cointelegraph.
He acknowledged that while ASIC supports responsible innovation in the crypto sector, it remains vigilant regarding potential consumer harm and market misconduct. This concern is driving the need for a robust regulatory framework.
“ASIC expects to issue updated draft guidance in the coming months, which we will open up for feedback from the industry,” the commissioner added. He further stated, “ASIC believes that licensing and its subsequent protections will mitigate risk while bolstering consumer confidence and market integrity—two elements that are crucial for encouraging innovation in the financial system.”
Criticism from Lawmakers
The news about ASIC’s forthcoming guidance comes amid criticism from Senator Andrew Bragg, who has slammed Australian regulators for their lack of proactive measures in regulating the crypto market. On September 23, Bragg shared his thoughts on X, stating that Australia has “gone from crypto leader to crypto laggard” over the past two and a half years.
In his speech at the AFR event, the senator highlighted that Australia was expected to establish a comprehensive regulatory framework for cryptocurrencies a few years ago. Finance Minister Stephen Jones had previously claimed that the Labor Party’s approach would focus on “safety and transparency.”
Senator Bragg criticized the government for what he termed a “complete abandonment” of the 2022 regulatory framework for crypto asset secondary service providers (CASSP) following the recent election. He noted that the Labor Party merely re-released a consultation paper after 18 months without any substantive discussion on the matter.
Bragg expressed skepticism about the likelihood of passing any crypto legislation during the current Parliament term, stating: “Labor will not deliver any crypto legislation in this term of Parliament. They have wasted three years focusing solely on their close vested interests. By locking Australia in the crypto slow lane, Labor has stifled innovation and denied Australians the opportunities to reap the benefits that blockchain provides.”
Committee Recommendations
As previously reported by Cointelegraph, Australia’s Committee on Economics Legislation recommended against passing Senator Bragg’s crypto regulation bill in early September 2024. The committee cited the need for further research on the issue before any regulatory framework could be established.
Introduced in March 2023, the draft bill aimed to provide regulatory recommendations for stablecoins, the licensing of exchanges, and custody requirements.
The forthcoming changes from ASIC signify a pivotal moment for cryptocurrency regulation in Australia. By requiring crypto firms to hold financial services licenses, regulators aim to foster a safer and more transparent environment for both consumers and businesses in the digital asset space. However, the delays and criticisms from lawmakers like Senator Bragg highlight the complexities and challenges of establishing a comprehensive regulatory framework.
As the situation develops, stakeholders in the Australian crypto market will be closely monitoring how these changes unfold and what impact they will have on the industry.
