- 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 crypto-asset exchanges in Australia via X (formerly Twitter) and termed the development a “key milestone.”
Caroline Bowler, CEO of BTC Markets responds to the consultation paper from the Commonwealth Treasury regarding proposed regulation of crypto-asset exchanges in Australia:
“At BTC Markets, we are pleased to have reached this key milestone. A positive progression for the crypto… pic.twitter.com/gyso38LmTX
— BTC Markets (@BTCMarkets) October 16, 2023
The proposal includes 32 key themes and invites written submissions by December 1, 2023, reflecting the government’s intention to involve all relevant stakeholders in shaping the final regulations.
Australian Central Bank Digital Currency (CBDC) research
In addition to the crypto exchange regulation, Australia is making strides in the field of central bank digital currency (CBDC) research.
The Reserve Bank of Australia and the Treasury will jointly publish a report in 2024, offering insights into CBDC research within the nation and outlining a roadmap for future work. This move reflects a coordinated approach to exploring the possibilities and implications of digital currencies.
Australia’s delayed but anticipated regulatory proposal signals a robust commitment to regulating the crypto industry in a manner that balances protection and innovation.
As the consultation process unfolds, the nation is gearing up to join its international peers in establishing a framework that addresses the unique challenges of the digital asset space while safeguarding the interests of consumers.
The post Australia proposes new licensing regime for crypto exchanges appeared first on CoinJournal.
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