The Australian Securities and Investments Commission (ASIC) is seeking public feedback on a proposal to mandate a financial services licence for cryptocurrency businesses.
13 Example Approach
In the consultation paper released today (Wednesday), the regulator used 13 examples of products, ranging from crypto wallets to meme tokens, to show how existing financial product definitions might apply to crypto businesses.“Australia’s financial services regulatory regime is broad and technology-neutral,” said ASIC’s Commissioner, Alan Kirkland. “Many digital assets and related products are financial products under the current law. Stakeholders have been calling for greater clarity, and in response, we are releasing our draft updated guidance.”
The consultation paper did not surprise the industry, as a previous media report had already revealed the regulator’s plans to mandate the requirement for an Australian Financial Services (AFS) licence for cryptocurrency platforms operating locally.
The examples in the consultation paper include exchange tokens, native token staking services, in-game non-fungible tokens (NFTs), yield-bearing stablecoins, gold asset-referenced tokens, membership NFTs, tokens representing claims for pre-paid services, fundraising for a new blockchain, meme coins, tokenised concert tickets, tokenised securities, contracts for difference over digital assets, and digital asset wallets.
Proper Licensing of the Crypto Industry
The regulator is also considering significantly expanding its approach to licensing wrapped tokens and ‘stablecoins’.
If the proposal in the consultation paper is approved, Australia’s crypto industry will come under the full purview of ASIC, which already oversees the country’s financial services sector.
The regulator will accept industry feedback on the consultation paper until February 2025 and will publish a final version in mid-2025.
“We recognise that the industry will need some time to consider and act on our updated guidance, so we are also consulting on a proposed transitional approach,” Kirkland added.
Interestingly, the Australian regulator has sued at least two crypto businesses for violating its Design and Distribution Obligations. While the court declined to penalise Block Earner, it held Kraken accountable for breaching local laws by offering fiat-based margin products.
This article was written by Arnab Shome at www.financemagnates.com.
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