Australia is taking significant steps to regulate the rapidly growing cryptocurrency industry to provide clarity on cryptocurrency and protect consumers. The Australian Treasury recently announced that it has published a proposal to regulate crypto asset services platforms. This proposal outlines the key aspects of the upcoming legislation and covers licensing and custody rules for crypto asset providers. Here are the details…
Cryptocurrency regulation and licensing schedule announced
The Australian government expects legislation to be published by 2024. Once this legislation becomes law, cryptocurrency exchanges will have a 12-month transition period to comply with the new regulatory regime. This timeline means it could take until 2025 for an Australian digital asset platform to obtain a license under the proposed regulations. These developments represent some of the most significant steps taken by the Australian government in framing crypto regulations. The proposal was first announced in February 2023 and the consultation document was published in October.
The announcement of the proposal coincided with a speech by Australian Deputy Treasurer and Minister for Financial Services Stephen Jones at the Australian Financial Review Crypto Summit (AFRCM). Details of the offer were first reported by the AFR. The proposed regulatory framework takes a consumer protection-centered approach and aims to cast a wide net to cover a variety of business models that are currently unregulated. It is noteworthy that NFT marketplaces that hold customer assets may also require licenses within this framework.
License to exchanges with more than $3.15 million in assets
Under the proposal, all cryptocurrency exchanges with more than AUD 1,500 ($946) for a single customer or more than AUD 5 million ($3.15 million) in total assets would require an Australian Financial Services licence. These licenses will be issued by the Australian Securities and Investments Commission. The proposal seeks input and feedback from a variety of stakeholders and industry participants on 32 different themes. Written applications are invited until December 1, 2023. The proposal also highlights collaboration between the Australian Treasury and the Reserve Bank of Australia, which plan to publish a joint report in mid-2024.
This report will provide an inventory of central bank digital currency (CBDC) research in Australia and outline a roadmap for future work. Earlier this year, Australia decided to postpone any decision regarding CBDC due to unresolved issues arising from a pilot project. Australia’s proposed cryptocurrency regulation comes in response to the need to protect consumers and address potential vulnerabilities in crypto asset services platforms. Some banks in Australia have become increasingly wary of potential crypto fraud risks and have taken measures to limit their customers’ ability to send money to crypto exchanges.
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