- Australia has proposed regulations for crypto exchanges.
- The draft legislation could come into effect by 2024.
- Individual cryptocurrencies or tokens won’t be regulated with the framework.
The Australian government is taking bold steps to regulate digital asset service providers under a new licensing regime that could be rolled out by 2024.
On October 16, Australia’s Treasury published a regulation consultation paper stating that the recent failures and vulnerabilities witnessed in crypto exchanges have increased the need for oversight and consumer protection.
Regulating Digital Asset Platforms
In the consultation paper, the Australian government proposes leveraging existing financial services laws to enact a regulatory framework for entities that provide access to digital assets and hold them on behalf of local users and businesses.
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Per the proposal, digital asset platforms that hold over AUD 1,500 ($946) for an individual client or over AUD 5 million ($3.2 million) in aggregated assets would be required to obtain an operating license from the Australian Securities and Investment Commission (ASIC) and comply with the same rules as other financial service providers.
Notably, the regulator also seeks to enforce certain standards to ensure consistent oversight, including setting up requirements for custody software and requirements for transacting in tokens. Other crypto-related activities that would be regulated include trading, staking, fundraising, and tokenization.
Even as the paper seeks to tighten Australia’s oversight of the nascent digital assets industry, it clarifies that the proposed regulations would primarily target crypto exchanges and service providers rather than individual tokens or cryptocurrencies.
Are Cryptocurrencies Off the Hook?
According to the paper, cryptocurrencies are diverse, and not all digital assets fall under the purview of Australia’s Corporations Act.
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Consequently, the Treasury proposes a token mapping exercise by the end of the year to classify different types of cryptocurrencies, including utility tokens, payment tokens, security tokens, and stablecoins, and determine whether they meet the threshold of regulated financial products.
Meanwhile, the Treasury will close consultations on the proposed paper on 1 December 2023. When the draft legislation comes into effect, crypto exchanges will have 12 months to transition to the new regulatory framework.
Read why Australian authorities are pushing for reforms in retail crypto:
Australian Authorities Push For Reform In Retail Crypto
Stay updated on why Australian senators recently rejected crypto regulation bill:
Australian Senate Committee Rejects Crypto Regulation Bill
