Australian Treasury Proposes New Licensing for Crypto Exchanges
The Australian Treasury has recently released a consultation document outlining its proposal for cryptocurrency exchanges to obtain a financial services license from the local financial regulatory authority.
The Australian federal government is advancing its efforts to regulate the digital asset industry, specifically focusing on cryptocurrency exchanges. The potential requirement for cryptocurrency exchanges to acquire a financial services license from the local financial regulatory body is being considered.
The “Regulating Digital Asset Platforms” consultation paper, disclosed on October 16 by the Australian Treasury, aims to address consumer-related issues and stimulate innovation within the digital asset sector.
The comprehensive regulatory framework can be viewed here.
The proposed regulatory framework primarily focuses on regulating cryptocurrency exchanges and service providers rather than individual cryptocurrencies or tokens. It clarifies that crypto exchanges will be subject to existing financial services regulations without introducing new, crypto-specific rules.
Responses to the proposal from Australian cryptocurrency exchanges have been mixed, with Adam Percy, Swyftx’s general counsel, praising it as “thoughtful” and emphasizing the importance of ensuring appropriate protections for cryptocurrency users while allowing room for innovation.
On the contrary, Jonathon Miller, Director of Kraken Australia, expressed disappointment, characterizing the consultation paper as an attempt to fit crypto into the existing financial services regulation framework.
Liam Hennessy, a partner at Clyde & Co, noted that the Treasury is still grappling with various token types and service providers. He emphasized that the proposals in the consultation paper are not legally binding recommendations but rather suggestions, and there will likely be lobbying as the consultation process unfolds.
Hennessy pointed out that the consultation paper may not effectively address more immediate concerns within the Australian crypto industry, such as the recent wave of de-banking issues, stating that many licensed digital asset exchanges, both domestic and international, are struggling to secure adequate banking arrangements.
It’s important to note that the Treasury highlighted the primary purpose of the consultation paper as “seeking feedback” on the inquiries and regulations it contains and encouraged feedback submissions by December 1, 2023.
