- Exchanges with specific asset levels must obtain an Australian Financial Services License
- The draft legislation is expected to go out by 2024.
- A consultative process seeks input from stakeholders and the public on 32 key regulatory themes.
In a significant move towards regulating the rapidly expanding cryptocurrency industry in Australia, Australia’s Treasury has unveiled plans to introduce a comprehensive licensing regime for crypto exchanges.
The initiative is designed to enhance consumer protection, bring much-needed clarity to the digital asset sector, and pave the way for the nation to align with global regulatory standards.
The newly proposed regulatory framework
Under the newly proposed framework, cryptocurrency exchanges operating in Australia must obtain an Australian Financial Services license (AFSL) from the Australian Securities and Investments Commission (ASIC).
This regulatory measure will be applicable to exchanges that hold more than AUD 1,500 of any single client’s assets or have total assets exceeding AUD 5 million. The approach seeks to ensure that exchanges are equipped to safeguard the interests of their customers and adhere to robust financial and operational standards.
Draft legislation by 2024
The Treasury’s timeline outlines a plan to release draft legislation covering licensing and custody rules for crypto asset providers by 2024. Once the legislation is enacted into law, crypto exchanges will have a 12-month transition period to align their operations with the new regulatory framework. This means it may take until 2025 for an Australian digital asset platform to receive a license under this fresh regulatory regime.
The proposed regulatory framework’s approach is consumer-centric, aiming to strike a balance between ensuring consumer protection and fostering innovation. It acknowledges that the digital asset landscape is evolving rapidly and seeks to provide clear guidelines to industry participants.
Consultation and feedback
The government has initiated a consultation process, soliciting feedback from industry stakeholders and the public. This approach underscores the desire to create well-informed, balanced, and acceptable regulations for the broader community.
Caroline Bowler, CEO of BTC Markets responded to the consultation paper from the Commonwealth Treasury regarding the proposed regulation of…